COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM103OCT23
In the matter between:
CBD Investments (Pty) Ltd Primary Acquiring Firm
And
Rebosis Property Fund Limited, Ascension
Properties (Pty) Ltd, Main Street 1119 (Pty) Ltd
and Cape Horizon Properties 125 (Pty) Ltd in
respect of a portfolio of 22 (twenty-two) property
rental enterprises
Primary Target Firms
Introduction
[1] On 07 December 2023, the Competition Tribunal (“Tribunal”) conditionally
approved the large merger wherein CBD Investments (Pty) Ltd (“CBD
Investments”) intends to acquire a portfolio of 22 (twenty-two) property rental
enterprises (“Target Properties”) from Rebosis Property Fund Limited
(“Rebosis”) and its subsidiaries, Ascension Properties (Pty) Ltd (“Ascension”),
Main Street 1119 (Pty) Ltd (“Main Street”) and Cape Horizon Properties 125
(Pty) Ltd (“Cape Horizon”) (collectively referred to as the “Target Firms”).
Panel : AW Wessels (Presiding Member)
: L Mncube (Panel Member)
: G Budlender (Panel Member)
Heard on : 06 November 2023
Order issued on : 07 November 2023
Reasons issued on: : 10 January 2024
REASONS FOR DECISION
The Parties
Primary acquiring firm
[2] CBD Investments is a private company and wholly owned subsidiary of Heriot
Investments (Pty) Ltd (“Heriot Investments”) 1. Heriot Investments owns 87%
shareholding in Heriot REIT, a property holding, and investment company listed
on the Johannesburg Stock Exchange’s (“JSE”) AltX.2 (“Heriot Group”)
[3] Heriot Group owns a property portfolio comprising retail, industrial, office,
residential and specialised properties as well as vacant land in South Africa.
Relevant to the proposed transaction are Heriot Group’s activities in the
provision of industrial and office properties.
Primary target firms
[4] Rebosis is an approved Real Estate Investment Trust (“REIT”), established by
the Billion Group in 2010 and listed on the JSE in 2011.
3 It owns a diverse
property portfolio in South Africa, comprising retail, office and industrial
properties. Ascension, Main Street and Cape Horizon are subsidiaries of
Rebosis. The target firms were placed under business rescue in 2022.
[5] The Target Firms own the 22 Target Properties being acquired by CBD
Investments as follows:
Rebosis 16 properties
Ascension 4 properties
Main Street 1 property
Cape Horizon 1 property
[6] Details of the Target Properties, including their location, size, and ownership are
attached hereto, marked “Annexure B”.
Transaction and Rationale
Transaction
[7] The proposed transaction entails CBD Investments acquiring the Target
Properties from the Target Group, as a going concern. Upon implementation,
CBD Investments will exercise sole control over the Target Properties.
1 Heriot Investments is a wholly owned subsidiary of the Gusi Trust (“Gusi Trust”)
2 Competitiveness Report, record, p 60.
3 Ibid, record, p 66.
Rationale
[8] The proposed transaction provides an opportunity for CBD Investments to turn
around the financially distressed Target Properties which it has identified as
lucrative and viable assets.
[9] From the sellers’ perspective, the proposed transaction is motivated by Rebosis’
present business rescue plan which mandates the wind-down sale of its assets.
The proposed transaction also seeks to ensure the business continuity of the
Target Properties and to secure the continued employment of the current
employees associated with the Target Properties.
Competition Assessment
Overlaps
[10] In assessing the relevant market/s to determine overlaps we compared, having
regard to the substitutability in terms of product classification, property grade
and geographic location, Heriot Group’s property portfolio to the Target
Properties and found that the proposed transaction gives rise to a horizontal
overlap, arising from the merging parties’ involvement in the provision of office
space and light industrial space.
Market Definition
Provision of Office Space
[11] The Tribunal has previous concluded that the property market can be broadly
divided into categories based on the use of the property such as retail, industrial,
office, residential and other property.4 Further, that office properties can be sub-
divided into different classes such as Grade P, A, B or C. Furthermore, in
Momentum Property Investments and Bonatla Property Holdings,
5 the Tribunal
found that the geographic market for office properties is defined in terms of
regional nodes.
[12] In classifying the merging parties’ office space, the Commission, and the
merging parties, relied on data from the South African Property Owner’s
Association (“SAPOA”) and found that 5 properties within the Heriot Group’s
property portfolio and 2 Target Properties, namely 124 Main and 28 Harrison
(items 3 and 4 of Annexure B respectively) are classified under SAPOA as “A-
Grade”6 office spaces.
Grade”6 office spaces.
4 Primegro Properties Ltd and Growthpoint Properties Ltd [LM015Jun03] ZACT.
5 Momentum Property Investments (Pty) Ltd and Bonatla Property Holdings Ltd [LM020Jul03] ZACT.
6 The SAPAO Office Vacancy Survey Quarter 2: June 2023 describes an A-Grade office as “High quality
properties providing good access and are professionally managed with continued above average
[13] In addition, while there is no geographical overlap between the merging parties’
A-Grade properties as the abovementioned Target Properties are located in the
Johannesburg CBD and the Heriot Group does not own A-Grade office space in
the Johannesburg CBD, the Commission and merging parties, agreed to assess
the effects of the proposed transaction on the provision of A-Grade office space
using a 15km radius.
[14] On account of the evidence before us and for purpose of our analysis, we
considered the effect of the proposed transaction on the market for the provision
of A-Grade office space. Moreover, having received no evidence in support of
broadening or narrowing the geographical market, we considered the effect of
the proposed transaction on the Johannesburg CBD and surrounding nodes
based on a 15km radius.
Provision of Light Industrial Space
[15] In line with Tribunal precedent in Primegro Properties Ltd and Growthpoint
Properties Ltd, the Commission and the merging parties submitted that industrial
property can be divided into “light” industrial and “heavy” industrial property.
Further, that the proposed transaction gives rise to an overlap in the provision
of light industrial space as 4 properties in the Heriot Group’s property portfolio
and 1 Target Property (i.e. Antalis, located in Selby (see item 21 to Annexure
B)) are classified as light industrial space.
[16] The merging parties submitted that Antalis is located in Selby, an area primarily
surrounded by industrial properties geared towards manufacturing,
warehousing, distribution and logistics. As such, they utilised a catchment area
comprising all nodes and locations situated within a 12km radius of Antalis. The
Commission differed with the merger parties and submitted that it is not
necessary to take a definitive view on the geographic market, however, relying
on Tribunal precedent in Unico Property Partners Proprietary Limited and
Khumonetix Proprietary Limited in Respect of 6 Industrial Properties, it assessed
Khumonetix Proprietary Limited in Respect of 6 Industrial Properties, it assessed
the geographical market based on a 15km radius in Selby and surrounding
nodes.
[17] For purpose of our assessment, we considered the effects of the proposed
transaction on the market for the provision of light industrial space. Furthermore,
having received no evidence in support of broadening or narrowing the
geographical market, we considered the effect of the proposed transaction in
Selby and surrounding nodes based on a 15km radius.
maintenance. High quality modern finishes, air conditioning, adequate on-site parking. Clearly
articulated entrance, lobby with clear circulation. High ceiling heights, flexible floorplates likely.”
Horizontal unilateral effects
[18] The Commission, relying on data from SAPOA, submitted that the merged entity
will have a post-merger market share of approximately 2.20% with a market
share accretion of 1.53% in the market for the provision of Grade A office space
in the Johannesburg CBD and surrounding nodes (based on a 15km radius).
[19] Further, that the merged entity will have a post-merger market share of
approximately 5.53% with a market share accretion of 0.89% in the market for
the provision of light industrial space in Selby and surrounding nodes (based on
a 15km radius).
[20] The Commission also found, in respect of both markets, that the merged entity
will face competition from market participants such as Accelerate Property Fund
Limited (“Accelerate”), Emira Property Fund Limited (“Emira”), Acsion Limited
(“Acsion”), Redefine Properties Limited (“Redefine”).
[21] In assessing whether the proposed transaction will result in a significant
lessening of competition, we considered that post-merger, the merged entity’s
market shares in the markets for the provision of (i) A-Grade office space in the
Johannesburg CBD and surrounding nodes; and (ii) light industrial space in
Selby and surrounding nodes (based on a 15km radius) are less than 10% and
that the merged entity will remain subject to constraints from the likes of
Accelerate and Redefine.
[22] In the circumstances, we find that the merger does not give rise to a likely
prospect of significantly lessening competition in the relevant markets.
Public interest assessment
Effect on employment
[23] The merging parties submitted that the proposed transaction will not have any
adverse impact on employment.
[24] The Commission engaged the employee representative of CBD Investments
and no concerns were raised.
[25] Employee representatives of the Target Properties raised several concerns
including whether the employees of the Target Properties would be employed
including whether the employees of the Target Properties would be employed
on the same terms and conditions post-merger and whether their fixed-term
contracts of employment will remain the same and at the expiry of the fixed-term
contracts will they be renewed.
[26] The Commission submitted that based on its interaction with the merging parties
regarding these concerns, there is no evidence suggesting that there will be any
merger-specific retrenchments arising as a result of the proposed transaction
since the employees will be transferred in terms of Section 197 of the Labour
Relations Act.
[27] In light of the above, the Tribunal sought clarity as to whether the concerns
raised by the employees of the Target Properties were fully addressed,
specifically regarding the potential effects of the proposed transaction on fixed-
term contract workers. For completeness, the Tribunal requested clarity
regarding the number of fixed-term contract workers in the acquiring and target
firms and the effects of the proposed transaction on these workers and their
terms of employment.
[28] In response, the merging parties submitted that there are currently six fixed-term
contract workers in the target firm. CBD Investments has no contract workers
and employees of the Target Properties will be taken on by the purchaser as
full-time employees in terms of section 197 of the Labour Relations Act.
[29] Considering the above, we consider it unlikely that the proposed transaction will
have a negative effect on employment.
Effect on the spread of ownership
[30] The Commission noted that pre-merger, the Heriot Group does not have
ownership held by HDP(s) and Rebosis has 62.28% black ownership of which
12.16% is held by black females.
[31] It is noteworthy that the Target Properties are primarily occupied by state-owned
departments, as such, the Heriot Group requires the relevant BBBEE rating in
order for it to operate the Target Properties, including the renewal of existing
leases. To achieve this, the merging parties submitted that a B-BBEE Newco
will be formed to address the extent of the dilution. 7
[32] Further, the B-BBEE Newco will be allocated a % participation stake in the
Target Properties. The Target Properties are currently valued at R
(being % of R ).
Target Properties. The Target Properties are currently valued at R
(being % of R ).
[33] The Commission considered whether the % to be allocated to the B-BBEE
Newco is sufficiently responsive to section 12A(3)(e) of the Act, given the
7
Concurring: Mr Andreas Wessels and Adv Geoff Budlender SC
Tribunal case managers : Baneng Naape and Matshidiso Tseki
For the merging parties :
Vani Chetty, Melinda Pianese and Mamta
Nathoo of Vani Chetty Competition Law (Pty) Ltd
For the Commission : Nhlakanipho Mbhense and Zanele Hadebe
CONFIDENTIAL
ANNEXURE A - CONFIDENTIAL
IN THE LARGE MERGER BETWEEN CBD INVESTMENTS (PTY) LTD AND REBOSIS PROPERTY
FUND LIMITED, ASCENSION PROPERTIES (PTY) LTD, MAIN STREET 1119 (PTY) LTD AND
CAPE HORIZON PROPERTIES 125 (PTY) LTD IN RESPECT OF A PORTFOLIO OF 22 (TWENTY-
TWO) PROPERTY RENTAL ENTERPRISES
TRIBUNAL CASE NUMBER: LM103Oct23
1. DEFINITIONS
In this document, the expressions used below will have the appropriate meaning assigned to
them and the following and related expressions will bear the following meaning:
1.1 “Acquiring Firm” means CBD Investments (Pty) Ltd;
1.2 “Approval Date” means the date on which the Merger is approved by the Tribunal in terms
of the Competition Act;
1.3 “B-BBEE Newco” means a newly formed entity for the purposes of the HDP Transaction
which will hold % of the issued shares in the Acquiring Firm;
1.4 “Commission” means the Competition Commission of South Africa, a statutory body
established in terms of section 19 of the Competition Act;
1.5 “Commission Rules” means the Rules for the Conduct of Proceedings in the Commission;
1.6 “Competition Act” means the Competition Act, No. 89 of 1998, as amended;
1.7 “Conditions” means the conditions in this Annexure A;
1.8 “Days” means any day that is not a Saturday, Sunday or public holiday in South Africa;
1.9 “HDP” means a historically disadvantaged person as contemplated in section 3(2) of the
Competition Act;
1.10 " HDP shareholders " means the black males and females to be identified by the Merged
Entity;
1.11 “HDP Transaction” means the transaction in terms of which HDP shareholders will be allotted
% of the issued shares in B-BBEE Newco;
1
.12 “Implementation Date” means the date on which the Merger is implemented by the Merging
Parties;
CONFIDENTIAL
2023OCT0003_CBD Investments and Rebosis Page 2 of 3
1.13 “Merger” means the acquisition by the Acquiring Firm of Rebosis Property Fund Limited,
Ascension Properties (Pty) Ltd, Main Street 1119 (Pty) Ltd and Cape Horizon Properties 125
(Pty) Ltd portfolio of 22 (twenty-two) property rental enterprises, as notified to the Commission
under Commission case number 2023OCT0003;
1.14 “Merging Parties” means Acquiring Firm and the Target Firm;
1.15 “ South Africa” means the Republic of South Africa;
1.16 “ Tribunal” means the Competition Tribunal of South Africa, a statutory body established in
terms of section 26 of the Competition Act;
1.17 “Target Firm” means Rebosis Property Fund Limited, duly represented by Phahlani
Mkhombo and Jacques Du Toit (Joint Business Rescue Practitioners); and
1.18 “Tribunal Rules” means the Rules for the Conduct of Proceedings in the Tribunal.
2. HDP OWNERSHIP TRANSACTION
2.1 Within 18 months of the Implementation Date, the Acquiring Firm shall implement the HDP
Transaction in terms of which HDP Shareholders shall be allotted a % indirect interest in
the Acquiring Firm, through B-BBEE Newco.
2.2 The HDP Shareholders are required to hold % indirect ownership in the Acquiring Firm, via
B-BBEE Newco, for a minimum period of . There shall be
A cquiring Firm. In this regard,
A cquiring Firm
.
3. MONITORING
3.1 The Merged Entity shall inform the Commission in writing of the Implementation Date within 5
(five) Days of the Implementation Date.
3.2 Prior to the implementation of the HDP Transaction, the Acquiring Firm will provide the
Commission with details of the HDP Transaction in writing. These details shall include, but not
be limited to, the identity of the HDP Shareholders, evidence that the HDP Shareholders are
CONFIDENTIAL
2023OCT0003_CBD Investments and Rebosis Page 3 of 3
HDPs, and confirmation of whether the HDP Transaction constitutes a merger for the purposes
of the Act.
3.3 The Commission may request additional information from the Merging Parties, which the
Commission may reasonably deem necessary to monitor the extent of compliance with the
Conditions.
3.4 Any person who believes that the Merging Parties have not complied with or have acted in
breach of the Conditions may approach the Commission with their complaint. If the
Commission determines that there has been an apparent breach by the Merging Parties of
these Conditions, the matter shall be dealt with in terms of clause Error! Reference source
not found. below.
4. VARIATION OF CONDITIONS
4.1 The Merging Parties and/or the Commission may at any time, on good cause shown, apply to
the Tribunal for the Conditions to be waived, relaxed, modified and/or substituted.
5. APPARENT BREACH
5.1 If the Merging Parties appear to have breached the Conditions or if the Commission
determines that there has been an apparent breach by the Merging Parties of any of the
Conditions, this shall be dealt with in terms of Rule 39 of the Commission Rules read together
with Rule 37 of the Tribunal Rules.
6. GENERAL
6.1 All correspondence concerning the Conditions must be submitted to the following e-mail
address: mergerconditions@compcom.co.za and ministry@thedtic.gov.za
ANNEXURE B
Item
No.
Property
Name
Owner Physical Address GLA
(m²)
Classification /
Grade
1. Riverpark Ascension
Corner of
Emnotweni and
Cascade Close,
Nelspruit,
Mpumalanga
4,215 A-grade office
2. Riverview Ascension
Corner of
Emnotweni and
Cascade Close,
Nelspruit,
Mpumalanga
4,303 A-grade office
3. 124 Main Rebosis
124 Main Street,
Johannesburg,
Gauteng
20,818 A-grade office
4. 28
Harrison Rebosis
28 Harrison Street,
Johannesburg,
Gauteng
20,984 A-grade office
5. Salu
Building Rebosis
255 Schoeman
Street, Pretoria,
Gauteng
30,354 A-grade office
6. 174
Visagie Ascension
174 Visagie Street,
Pretoria CBD,
Gauteng
13,376 B-grade office
7. Swiss
House Ascension
86 Main Street,
Johannesburg,
Gauteng
7,807 B-grade office
8. 11
Diagonal Rebosis
11 Diagonal Street,
Johannesburg,
Gauteng
37,758 B-grade office
9. 18 Rissik Rebosis
18 Rissik Street,
Johannesburg,
Gauteng
11,204 B-grade office
10. 189
Schoeman Rebosis
189 Schoeman
Street, Pretoria,
Gauteng
19,332 B-grade office
11. 270 Jabu
Ndlovu Rebosis
270 Jabu Ndlovu
Street,
Pietermaritzburg,
KwaZulu-Natal
11,455 B-grade office
12. 64 Eloff Rebosis
64 Eloff Street,
Johannesburg,
Gauteng
4,938 B-grade office
ANNEXURE B
13. 99 Market Rebosis
99 Market Street,
Johannesburg,
Gauteng
11,679 B-grade office
14. Arbour
Square Rebosis
82-98 Juta Street,
Braamfontein,
Johannesburg
9,206 B-grade office
15. Bank of
Lisbon Rebosis
400 Paul Kruger
Street, Pretoria,
Gauteng
14,599 B-grade office
16. Liberty Life
Building Rebosis 278 Madiba Street,
Pretoria, Gauteng
33,885 B-grade office
17.
NPA
(Victoria
Mxenge)
Rebosis
123 Westlake
Street, Weavind
Park, Pretoria,
Gauteng
24,720 B-grade office
18. Revenue
Building Rebosis
205 Pietermaritz
Street,
Pietermaritzburg,
KwaZulu-Natal
7,314 B-grade office
19. Surrey
House
Main
Street
35 Rissik Street,
Johannesburg,
Gauteng
11,738 B-grade office
20. Game
Building
Cape
Horizon
64 Pritchard Street,
Johannesburg,
Gauteng
21,437 B-grade office
21. Antalis Rebosis
12 John Street,
Selby,
Johannesburg,
Gauteng
18,954 Light Industrial
22. SASSA Rebosis
2460 Dr Makgobo
Avenue, Mmabatho
Unit 4, Mmabatho,
North West
11,665
Student
Accommodation
618 beds 212
individual units /
apartments