COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no: 107/LM/Nov05
In The Large Merger Between:
The Trustees for the Time Being of the CBS Property Trust Acquiring Firm
And
Growthpoint Properties Ltd Target Firm
Reasons for Decision
Approval
1. On 22 December 2005 the Competition Tribunal issued a Merger Clearance Certificate
approving the transaction between The Trustees for the time being of the CBS Property
Trust and Growthpoint Properties Ltd. The reasons for this decision follow.
The Transaction
2. The primary acquiring firm is The Trustees for the time being of the CBS Property Trust
(“CBS Property”), which is controlled by CBS Property Portfolio Limited (“CBS”), an unlisted
property company. The primary target firm is Growthpoint Properties Limited, a variable rate
property loan stock company listed on the Real Estate sector of the JSE Securities
Exchange South Africa (“JSE”). 1
3. In terms of the transaction, CBS Property will acquire from Growthpoint, a portfolio of nine
immovable properties and all right, title and interest in and to lease agreements in respect of
the premises forming part of that portfolio from Growthpoint. 2
4. According to the parties, CBS Property is in the process of acquiring a portfolio of properties
for the purposes of listing on the Real Estate sector of the JSE. From Growthpoint’s
perspective, the target properties are older and of lower quality compared to the overall
Growthpoint property portfolio. The parties submit that the current state of the property
market makes it possible to dispose of properties that no longer meet Growthpoint’s
investment criteria at relatively attractive prices. 3
1 A list of firms which hold more than 5% of the issued capital of Growthpoint can be found on page 10 of
the Merger Record.
the Merger Record.
2 A list of the properties can be found on page 2 of the Commission’s Report.
3 See pages 187188 of the Merger record.
The Merging parties’ activities
5. CBS Property currently does not have any property portfolio. Both Growthpoint and CBS
own property and derive income from rentals received from the tenants in the properties
they own. CBS owns property located in the Western Cape and Gauteng. Growthpoint owns
120 properties located throughout South Africa.
6. Growthpoint also derives income from investments through its shareholding in Centrecity
Property Fund Limited and Metboard Properties Limited. The parties submit that none of
Growthpoint’s interests in these companies confer on it the ability to materially influence the
policies of these companies.
Impact on Competition
7. An examination of the property portfolio’s of CBS and Growthpoint reveals the following:
8.
8.1. Where CBS and Growthpoint compete in the same class of property, 4 there is no
geographic overlap in their activities; 5 and
8.2. Where CBS and Growthpoint are active in the same geographic nodes, the class
of property differs. 6
9. Based on the information provided to us by the merging parties and the Commission, we are
satisfied that the transaction does not raise any significant competition concerns. There are
no public interest issues, which would alter our view. The transaction is approved
unconditionally.
8 March 2006
N Manoim Date
Concurring: L Reyburn and M Mokuena
For the merging parties: Advocate O Mooki instructed by Jowell Glyn & Marais.
4 The delineation of the various classes of property as well as the various relevant geographic nodes
have been dealt with in a number of large mergers before the Tribunal.
5 Growthpoint’s commercial properties are located in Gauteng and KwaZulu Natal and CBS’s in the
Western Cape. Growthpoint’s industrial properties are located in Gauteng and NorthWest, while CBS’s
are located in the Western Cape.
6 Confirmed by Counsel for the merging parties during the hearing – at page 11 of the transcript.
2
For the Commission: T Kekana and M Matsimela (Mergers and Acquisitions)
3