COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 108/LM/Nov05
In the large merger between:
The Public Investment Corporation Limited
and
ADR International Airports South Africa (Pty) Ltd
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Order
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Introduction
On 15 December 2005 the Competition Tribunal approved the merger between
the Public Investment Corporation Limited and ADR International Airports South
Africa (Pty) Ltd. The reasons are set out below.
The transaction
The primary acquiring firm is the Public Investment Corporation Ltd (“PIC”). The
Minister of Finance of the Republic of South Africa controls the PIC. PIC invests
funds on behalf of public sector entities including the Government Employees
Pension Fund (“GEPF”). The PIC will be the registered owner of the shares of
ADRIASA and will control ADRIASA by virtue of its mandate from the
Government Employees Pension Fund (“GEPF”) on whose behalf PIC will
acquire the shares in ADRIASA.
The primary target firm is ADR International Airports South Africa (Pty) Ltd
(“ADRIASA”). Airport Invest B.V (“Airport Invest”), a subsidiary of Aeroporti di
Roma S.P.A (“ADR”), controls ADRIASA. ADRIASA and the Minister of
Transport jointly control the Airports Company South Africa (“ACSA’). 1
1 ACSA was created in 1993 by an Act of Parliament and effectively commenced operation in 1995.
ACSA was one of the first State Owned Enterprises to be partially privatised and in March 1998 Aeroporti
In terms of the sale agreement Airport Invest B.V. is selling the following shares
and claims to the Public Investment Corporation Ltd (“PIC”):
All the shares in the issued share capital of ADRIASA; and
All the claims of Airport Invest, at the effective date, against ADRIASA and
ACSA.
What this in effect means is that ADR is selling its 20% indirect equity interest in
ACSA to PIC. PIC will thus acquire indirect joint control with the Minister of
Transport of ACSA. PIC will continue to enjoy the same rights that ADR had in
terms of the latter’s shareholders agreement with the government and hence the
joint control situation is perpetuated. Although a public sector body the PIC has
autonomy in respect of its investment decisions.
Rationale for the transaction
From PIC’s perspective the transaction will expose it to the aeronautical and
aviation industry and from the target’s side, the disposal by ADR of its indirect
20% equity interest in ACSA is in line with its core strategy of deploying capital in
its home market of Italy.
Competitive assessment
PIC invests funds on behalf of the public sector entities including the GEPF. PIC
also manages a number of properties, which provide office, retail, industrial and
other rental space.
ADRIASA is a holding company that provides no products and services. ACSA
develops, provides, maintains, manages and operates airports, parts of airports
or any facilities or services that are normally performed at an airport such as
letting of retail and office space as well as the installation and integration of
computer systems and hotel operations.
Although the merging parties are both active in the broad property market, in the
leasing of office grade AB and C property, the Commission found that the
geographic markets do not overlap.
di Roma acquired 20% of ACSA’s shares, with the option to acquire a further 10% of the shareholding in
2005, to become the South African Government’s strategic equity partner in ACSA through a competitive
bid. The Minister of Transport holds 74.6% of the shares in ACSA and various empowerment groups the
remaining 4.21%.
2
We therefore agree with the Commission that the proposed transaction is unlikely
to substantially prevent or lessen competition.
Public interest issues
No significant public interest issues were found.
____________ 22 December 2005
N Manoim Date
Concurring: Y Carrim, M Mokuena
3