Vusani Investments (Pty) Ltd and Immovable Properties (owned by Sanlam Life Insurance Ltd) (123/LM/Dec 05) [2006] ZACT 31 (7 April 2006)

70 Reportability
Competition Law

Brief Summary

Competition Law — Merger Approval — Vusani Investments (Pty) Ltd acquiring immovable properties from Sanlam Life Insurance Ltd and its subsidiaries — Vusani Investments, a newly formed company with no prior trading history, seeks to acquire retail, office, and industrial properties to promote BEE ownership — The merger does not substantially lessen or prevent competition as there is no overlap in activities between the parties — No public interest concerns identified — Merger approved by the Competition Tribunal.

COMPETITION TRIBUNAL 
REPUBLIC OF SOUTH AFRICA
     Case No: 123/LM/Dec 05
In the large merger between: 
Vusani Investments (Pty) Ltd 
and
Immovable Properties owned by Sanlam Life Insurance Ltd 
Reasons for Decision
________________________________________________________________
Approval
1. On   22   March   2006   the   Competition   Tribunal   issued   a   merger   clearance  
certificate approving the merger between Vusani Property Investmens (Pty)  
Ltd and certain immovable properties owned by one or other of Sanlam Life  
Insurance Limited, Tralee Court (Pty) Ltd, and Brukkaros Investment (Pty)  
Ltd. The reasons appear below.
The Parties
2. The   acquiring   firm   is   Vusani   Property   Investments   (Pty)   Ltd   (”Vusani  
Investments”), a newly formed company that does not control any firm and  
has never traded before.  Vusani Investments is owned by Vusani Holdings  
(Pty) Ltd (“Vusani Holdings”), a shelf company. Vusani Holdings is owned  
by a number of shareholders in the following percentages:
 Vusani Properties (Pty) Ltd (61.4%)
     Mervyn Serebro Discretionary Trust (17.4%)
 Elad Discretionary Trust (17.4%)
 Mtupo Properties (Pty) Ltd  (3.8%)
Some   of   these   shareholders   are   subsidiaries   and   are   controlled   by   other  
shareholders, the details of which are not significant for the purposes of this

decision.1
3. The primary target is a number of immovable properties owned by one or  
other of Sanlam Life Insurance Limited (“Sanlam”), Tralee Court (Pty) Ltd  
(“Tralee”)   and   Brukkaros   Investment   (Pty)   Ltd   (“Brukkaros”).   Tralee   and  
Brukkaros  are   wholly   owned   subsidiaries   of  Sanlam.   Sanlam  is  a  wholly  
owned subsidiary of the Sanlam Group Limited, which has got many other  
subsidiaries not relevant for the purposes of this decision.  
The Merger Transaction
4. Vusani Investment is acquiring from Sanlam, Tralee and Brukkaros certain  
immovable   properties 2  comprising   retail,   office,   and   industrial   properties  
and   showrooms.   Post   merger   Vusani   Holdings   will   hold   100%   of   the  
ordinary share capital in Vusani Investments. This will give Vusani Holdings  
70% voting rights in that company. Sanlam will acquire 21 924­preference  
shares in Vusani Investment, which will give it 30% of the voting rights. 3  
 
5. Sanlam   will   provide   finance   to   Vusani   investments   to   purchase   the   said  
properties,   subject   to   the   debenture   subscription   agreement   entered   into  
between Vusani Investments and Sanlam. 4
.
Rationale for the Transaction 
f. The   parties   have   stated   that   because   of   the   transformation  
process   taking   place   in   the   property   industry,   Sanlam   wants  
appropriate   BEE   ownership   and   management   of   the   specified  
immovable properties. Vusani, which is a BEE company, wishes  
to   participate   in   the   property   market   and   views   this   as   an  
opportunity to do so. 
The relevant markets
1  Further details pertaining to these cross­ownerships can be obtained from page 3 of the record
2  Details of the properties can be found on page(s) 4, 43­45 of the record and on the table below. However, at  
the hearing the parties stated that two of the properties namely Metcash Thlabane and Metcash Thaba Nchu

have fallen out of the transaction. (See page 2 of the Transcript for further details).
3  See page 528 of the record for further details.
4  Further details can be found on page 16 and 517­651 of the record.
2

g. The relevant market can be categorised depending on the uses  
of   the   property   and   this   includes,   retail,   office,   and   industrial  
properties and showrooms.
h. As can be seen from the table below, the geographic market is  
spread over seven provinces in South Africa and there are two  
properties   located   in   Namibia.   Thus   the   market   is   not  
concentrated. 
PROPERTY ESTIMATE
D MARKET  
SHARE
REGION TYPE
Bisho Indwe House 5% Eastern Cape Office
Rosettenville Shopping Centre 5% Gauteng Retail
Santrio Shopping Centre, Vanderbijlpark 5% Free State Retail
158 Jan Smuts & Auto Bavaria 1% Gauteng Office   and  
Showrooms
Sanlam Building, Bloemfontein 5%  Free State Office
81 Rissik Street, Johannesburg 1% Gauteng Office
Atrium Terrace, Randburg  1% Gauteng Office
West   Gate   Shopping   Centre,   Cape  
Town
5% Western Cape Retail
Sanlam Forum, Witbank 5% Mpumalanga Office
Odendaalsrus Shopping Centre 5% Free State Retail
Eersterus Plaza, Pretoria 1% Gauteng Retail
Market Square, King Williams Town 5% Eastern Cape Retail
Metcash, Wynberg 5% Western Cape Retail
Metcash, Vryheid 5% Free State Retail
SARS, Durban 5% Kwazulu Natal Office
Damelin College, Braamfontein  5% Gauteng Office
Metcash, George 5% Eastern Cape Industrial
Metcash, Ermelo 5% Mpumalanga Industrial
Metcash, Kimberly 2% Northern Cape Industrial
Metcash, Tsumeb 2% Namibia Industrial
Metcash, Walvis Bay 5% Namibia Industrial
3

i. Vusani Investments has not traded before and has no business  
or operating activities. There is no overlap between the activities  
of   Vusani   Investments   and   its   holding   companies,   on   the   one  
hand, and Sanlam, Tralees and Brukkaros, on the other. Thus the  
merger does not lead to a substantial lessening or prevention of  
competition.
 
j. Post   merger   Sanlam   will   have   a   form   of   control   of   Vusani  
Investments   mentioned   in   section   12   of   the   Competition   Act,  
1998   (as   amended)   as   a   result   of   the   minority   protections  
conferred   upon   Sanlam   by   the   subscription   and   shareholders’  
agreements. However, this does not result in any change in the  
competitive landscape because Sanlam controlled the properties  
pre­merger.   In   relation   to   Vusani   Investments   there   will   be   a  
change in control, the sense section 12 of the Act, as a result of  
the merger.
Public Interest
xi.There are no public interest concerns.
Conclusion
12. We   conclude   that   the   merger   will   not   lead   to   a   substantial   lessening   or  
prevention of competition. There are no public interest concerns, which may  
alter this conclusion.
07 April 2006
Y Carrim    Date
Concurring:  M Moerane and L Reyburn
For the merging parties:   Thabile Molokome, Cliffe Dekker
For the Commission:  Seema   Nunkoo   and   Mogalane   Matsimela,   Mergers  
and Acquisitions
4