South Africa’s Competition Commission has approved Clicks Investments’ proposal to acquire Sorbet from Old Mutual Private Equity – with conditions.
In November 2022, retailer Clicks announced it is set to acquire beauty salon franchise chain Sorbet for a cash consideration of R105 million.
The deal will result in Clicks holding 100% of the issued share capital of all Sorbet group entities.
This includes Sorbet Brands, in which the Clicks Group has held a 25% investment since 2015. Sorbet Brands holds the Sorbet intellectual property.
The Clicks Group also manufactures and supplies Sorbet-branded beauty and personal care products such as face care, skin care, nail polish, body wash, and make-up.
Clicks is buying Sorbet from Old Mutual Private Equity, which acquired the business as part of the previously listed Long4Life group.
It will only acquire Sorbet Holdings and the firms it controls, not the Sorbet Independent Salons. These salons will continue to be operated independently by individual franchisees.
The Competition Commission found that Clicks’ proposed transaction is unlikely to substantially lessen or prevent competition in any market in South Africa.
However, it recommended that the Competition Tribunal approve the proposed transaction with conditions.
Clicks must facilitate and fund up to half of the start-up costs of at least five further franchisees over five years to address concerns about promoting a greater spread of ownership. These franchisees will be historically disadvantaged persons (HDPs).
Clicks will also have to ensure that, within five years of the implementation date, at least 50% of franchise stores will have at least 50% ownership by HDPs.
Currently, Sorbet Holdings has approximately 196 franchised salons.
Clicks and Sorbet will also have to commit to increasing the local manufacturing of Sorbet products over the next five years.
Clicks must also ensure that Sorbet offers 10,000 training sessions for Sorbet franchisees and/or their employees for each of the three years following the transaction’s implementation.