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.
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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
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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
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