COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 66/LM/Jul05
In the large merger between:
Pangbourne Property (Pty) Ltd
and
The Rental Enterprise conducted by Paramount Property (Pty) Ltd
Reasons for Decision
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APPROVAL
On 29 September 2005 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Pangbourne Property (Pty) Ltd and the
Rental Enterprise conducted by Paramount Property (Pty) Ltd in terms of section
16(2)(a). The reasons for the approval of the merger appear below.
The Parties
1. The acquiring firm is Pangbourne Property (Pty) Ltd. (“Pangbourne”), a
company listed under the financial real estate sector of the JSE. It is not
controlled by any firm but itself controls a number of subsidiaries, none of
which are relevant for the purpose of this analysis. It also has a 48%
interest in iFour Properties Limited. 1 iFour is described as an “associate
company” of Pangbourne, and is an investment company also listed on the
JSE and also owning properties.
2. The primary target firm is the rental enterprise (“Enterprise”), which is
conducted by Paramount Property Fund Limited, also listed on the JSE as a
property loan firm. The property portfolio being acquired is registered in the
name of Paramount and comprises some 15 industrial and commercial
1 iFour’s subsidiaries include Sipan 1 (Pty) Ltd, iFour Properties S.A. (Pty) Ltd, iFour Properties Three
(Pty) Ltd, iIFour Properties Two (Pty) Ltd.
properties listed in the agreement of sale, as well as the business
enterprise of letting the property including all fixtures and fittings.
The Merger Transaction
3. Pangbourne is acquiring 15 properties currently registered in the name of
Paramount together with the business enterprise comprising letting of the
property and all fixtures and fittings.
Rationale for the Transaction
d. Paramount is disposing of its smaller properties spread over a wide
geographic area. Pangbourne seeks to acquire these properties to
aid its strategy of achieving consistent growth in returns for its group
unitholders.
The relevant product and geographic markets
e. Pangbourne invests in a range of properties in order to achieve
returns on behalf of its investors and manage risk.
f. Paramount has a property portfolio comprising various types of
rentable space including retail space, office space, industrial space,
parking space and other rentable space throughout the country.
g. The product overlap between the activities of Paramount and
Pangbourne is in respect of grade A office space and light industrial
space in the geographic areas or nodes of Sandton, Kempton Park
and Midrand.
Effect on Competition
vii.The combined postmerger market shares in
each geographic node are low, being as follows 2:
Kempton Park (industrial) 6.2%
Midrand (industrial) 9.5%
Sandton (office grade A) 0.24%
2 Based on industry data supplied by the South African Property Owners’ Association and Independent
Property Databank.
Conclusion
We conclude that the merger will not lead to a substantial lessening or prevention
of competition.
The Tribunal therefore approves the transaction unconditionally. There are no
public interest concerns which would alter this conclusion.
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17 October 2005
N. Manoim Date
Concurring: Y. Carrim, D. Lewis
For the merging parties: Edward Nathan Corporate Law Advisors
For the Commission: O. Strydom, Mergers and Acquisitions