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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM154Dec23
In the large merger between:
Redefine Retail Proprietary Limited Primary Acquiring Firm
And
Pan Africa Development Proprietary Limited and
a retail property development owned by Pan
Africa Phase 2 Proprietary Limited
Primary Target Firms
Panel: A Kessery (Presiding Member)
T Vilakazi (Tribunal Member)
L Mncube (Tribunal Member)
Heard on: 28 February 2024
Order issued on: 28 February 2024
Reasons Issued on: 20 March 2024
REASONS FOR DECISION
Approval
[1] On 28 February 2024, the Competition Tribunal (“the Tribunal”) unconditionally
approved the large merger whereby Redefine Retail Proprietary Limited
(“Redefine”) intends to acquire 50.8% of the issued share capital of and claims
against Pan Africa Development Proprietary Limited (“Pan Africa”) and a retail
property development owned by Pan Africa Phase 2 Proprietary Limited (“Pan
Africa Phase 2”). Post-merger, Redefine will have sole control over Pan Africa
and Pan Africa Phase 2.
It
competitiontribunal
SOUTH AFR ICA
Parties to the transaction and their activities
Primary acquiring firm
[2] The primary acquiring firm is Redefine a company incorporated under the laws
of South Africa. Rede fine is 100% controlled by Redefine Properties Limited
("Redefine Properties"). Redefine Properties is a Rea l Estate Investment Trust
which is listed on the Johannesburg Stock Exchange and is not controlled by
any single shareholder. Redefine and all the firms directly and indirectly
controlled by it will collectively be referred to as "Redefine".
[3] Redefine is active in the property sector, with a property portfolio comprising a
diverse range of properties including office, retail, residential and industrial
space situated throughout So uth Africa.
Primary target firm
[4] The primary target firms are:
4.1. Pan Africa, a company incorporated under the laws of So uth Africa -
- by Atterbury Property Fund Proprietary Limited ("Atterbury") and
Talis Property Fund (Ply) Ltd.; and
4.2. A retail property development owned by Pan Africa Phase 2. The retail
space to be developed by Pan Africa Phase 2 is a wholly owned subsidiary
of Atterbury.
[5] Pan Africa is active in property development in South Africa. C urrently, Pan
Africa's sole property is Pan Africa Shopping Cen tre, a commun ity centre
situated at the Corner of Watt and Th ird Avenue, Alexandra, Gauteng. Pan
Africa Shopping Centre has a gross lettable area ("G LA ") size of 15 767 m 2 of
retail space.
[6] Pan Africa and the entities that it controls w ill collectively be referred to as ("Pan
Africa").
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Propo sed transa ction and rationale
Transaction
[7] Redefine intends to
acquire Atterbury's 50.887% shares in, and 100% of Atterbury's claims against,
Pan Africa from Atterbury. Redefine w ill exercise sole control over Pan Africa
and all the related developments as envisaged by section 12(2) of the
Competition Act No. 89 of 1998, as amended ("the Act").
[8] In an indivisible transaction, Pan Africa Phase 2 w ill develop the adjacent
property into retail space by approximately 3 800ml2 and sell this to Redefine.
Comp etition assessm ent
[11] The Commission considered the activities of the merging parties and found that
the proposed transaction gives rise to a horizontal overlap as Redefine owns
retail properties, and the Pan Africa Shopping Centre and related developments
are retail properties.
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[12] The market for rentable retail space can be divided into four categories, namely,
convenience centres, comparative centres, lifestyle centres and value centres.1
In the current transaction, the Commission did not conclude on the exact product
market. However, it assessed the impact of the proposed transaction in the retail
property market considering comparative centres.
[13] The Tribunal has previously considered the relevant geographic market for
comparative retail centres as a 15km radius surrounding the target centre.2
The
Commission therefore assessed the market for comparative retail centres within
a 15km radius of Pan Africa Shopping Centre and the related development
properties.
[14] The merged entity will have an estimated market share of 20% based on GLA,
with a market share accretion of 3%. The merged entity will continue to face
competition from other comparative retail centres such as Hyde Park Corner,
Carlton Centre, Newtown junction, Campus square, Norwood Mall and Cresta
Shopping Centre, amongst others.
[15] On this basis, we agree with the Commission’s conclusion that the proposed
transaction is unlikely to result in a substantial prevention or lessening of
competition in any affected market.
Public interest assessment
Employment
[16] The merging parties submitted that the proposed transaction will not give rise to
employment concerns. The Commission engaged with the respective employee
representatives and no concerns were raised.
1 Atterbury Investment Limited, Attfund Retail Limited and Mantrablox Proprietary Limited Case No:
29/LM/Jun03.
2 Primegrowth Retail Property (Pty) Ltd and Hyprop Investment Proprietary Limited in respect of the
rental enterprise known as Atterbury Value Mart Case No: LM209Mar21 and Pareto Limited and
Fountainhead Property Trust Scheme Pareto Limited Case No: LM199Feb14.
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[17] The employee representative of Atterbury, the current property manager
confirmed that there are 4 employees who are not employed by Pan Africa and
are employed by Atterbury, the current property manager of the Pan Africa
Shopping Centre. These employees will be transferred to Redefine, on the exact
same employment terms.
[18] We are of the view that the proposed transaction is unlikely to raise significant
employment concerns.
Spread of ownership
[19] Pre-merger, Pan Africa has an ownership by historically disadvantaged persons
(“HDPs”) of 11.495% and Pan Africa Phase 2 has an ownership by HDPs of
22.59%.
[20] Redefine has an ownership by HDPs of 42.40%. As the merger will result in
Redefine acquiring 50.887% of Pan Africa, Pan Africa will have an ownership by
HDPs of 21.57%. This is an increase of approximately 10.08% from the pre-
merger position.
[21] Post merger, Pan Africa Phase 2’s ownership by HDPs will increase to 42.40%
which is an increase of approximately 19.81% from the pre-merger position.
[22] Considering the above, we are satisfied that the proposed transaction is unlikely
to raise any concerns from a public interest perspective.
Conclusion on public interest
[23] We are not aware of any other public interest concerns arising in this case.
Third party views
[24] No third parties, whether customers or competitors, expressed concerns about
the proposed merger to the Tribunal.
Conclusion
[25] The proposed transaction is unlikely to substantially prevent or lessen
competition in any relevant market and does not raise any public interest
concerns.
[26] We therefore approve the proposed transaction unconditionally.
Signed by:An isa Ke ssery
Signed at:2024-03-20 11 :23:59 +02 :00
Rea son:W itnessing A nisa Kessery
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Adv. Anisa Kessery
20 March 2024
Date
Prof. Thando Vilakazi and Prof. Liberty Mncube concurring
Tribunal Case Manager:
For the Merging Parties:
For the Commission:
Theodora Michaletos
Vani Chetty Competition Law (Pty) Ltd
Wiri Gumbie, Ratshi Maphwanya and Makati
Seekane
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