COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 40/LM/Apr07
In the matter between:
Leisurecorp LCC Acquiring Firm
And
Novelway Mauritius Limited Target Firm
Panel : Y Carrim (Presiding Member), M Mokuena (Tribunal Member),
and M Holden (Tribunal Member)
Heard on : 30 May 2007
Decided on : 30 May 2007
Reasons Issued: 26 June 2007
Reasons for Decision
Approval
1] On 30 May 2007, the Tribunal unconditionally approved the merger between
LeisureCorp LCC and Novelway Mauritius Limited. The reasons for approving
the transaction follow.
The parties
2] The primary acquiring firm is LeisureCorp LCC (‘Leisurecorp’). There are two
shareholders in Leisurecorp namely Istithmar Private Joint Stock Company
(Istithmar’) with 99% shareholding in Leisurecorp and Dubai World Holdings
Limited (‘Dubai World Holdings’) with 1% shareholding in Leisurecorp. Dubai
World Holdings does not control any firms in South Africa.
3] Istithmar is ultimately controlled by Dubai World Corporation (‘Dubai World’).
Istithmar has a substantial number of firms worldwide and its South African
subsidiaries are Istithmar Real Estate (South Africa) (Pty) Ltd (‘Istithmar Real
Estate’) and Lexshell 44 General Trading (Pty) Ltd (‘Lexshell’), which are
investment holdings companies. 1
4] The onlywholly owned subsidiary of Lexshell is V&A Waterfront Holdings (Pty)
Ltd (‘V&A Holdings’). The subsidiaries of V&A Holdings are:
[4.1] V&A Waterfront Properties (Pty) Ltd (‘V&A Properties’);
[4.2] Victoria & Alfred Waterfront (Pty) Ltd (‘V&A Manco’);
[4.3] V&A Waterfront Marina (Pty) Ltd (‘V&A Marina’); and
[4.4] Two Oceans Aquarium Trust (‘The Trust’).
5] Leisurecorp does not control any firms in South Africa.
6] The primary target is Novelway Mauritius Limited (‘Novelway Mauritius’).
Novelway Mauritius is controlled by Coolibah Limited (40% shareholder),
Canterbury Capital Limited (30% shareholder) and Namly Limited (30%
shareholder), which are Mauritian companies. 2 In South Africa Novelway
Mauritius controls Novelway Investments (Pty) Ltd (‘Novelway’). Novelway has
the following wholly owned subsidiaries:
[6.1] Pearl Valley Properties (Pty) Ltd;
[6.2] Pearl Valley Golf Club (Pty) Ltd;
[6.3] Pearl Valley Developments (Pty) Ltd; and
[6.4] Pearl Valley Management Company (Pty) Ltd.
7] Pearl Valley Manco controls Pearl Valley Golf Shop (Pty) Ltd.
1 For a complete list of all subsidiaries of Istithmar, see annexure F.
2 The only other company controlled by Coolibah Limited, Canterbury Capital Limited and
Namly Limited either individually or jointly is Pearl Valley Mauritius Limited. (Record p416)
2
Description of the transaction
8] Leisurecorp intends to acquire 100% of the issued share capital and claims in
Novel Way Mauritius. 3
Rationale for the transaction
9] Leisurecorp views this transaction as a standalone investment opportunity with
potential for growth.
10] Novel Mauritius has submitted that this transaction will enable it to strengthen
its cash flow status and asset base. 4
The parties’ activities
Primary acquiring firm
11] The acquiring group is involved in the following activities:
[11.1] Port operation services in 30 countries (excluding South Africa);
[11.2] Operating the Jebel Ali Freezone and Techno Industrial Park in Dubai;
[11.3] Private equity, commodities and other investments;
[11.4] Property and real estate development;
[11.5] Cleaning maintenance and parking;
[11.6] Security;
[11.7] Horticulture;
[11.8] Craft market rentals;
3 This acquisition is in terms of the sale and purchase agreement in terms of which the
primary acquiring firm will acquire from Coolibah Limited, Canterbury Capital Limited and
Namly Limited (the sellers) all of the issued share capital in and claims against the target firm.
(Record p418).
4 Novelway Mauritius also stated that it considered that Leisurecorp has the skills, funds
and,ability to further its current development, as well as the proposed development to be
known as the Pearl Valley II development.
3
[11.9] International planning and development;
[11.10] Marketing;
[11.11] Sales of gift vouchers;
[11.12] Tourism and events income; and
[11.13] Ownership of a public aquarium.
The primary target firm
12] Novelway Mauritius is involved in the development of Golf Estates and currently
owns the Pearl Valley Estate.
Competition analysis
13] The merging parties are both involved in the development of Golf Estates.
Consequently there is an overlap in the activities of the merging parties.
However, there is no geographic overlap as the Golf Estates owned and
developed by Leisurecorp are based in Dubai, in the United Arab Emirates and
those owned developed by Novelway Mauritius are based in South Africa.
14] At the hearing, the Tribunal enquired as to why a market definition analysis had
not been undertaken by the Commission in its recommendation. In particular
the Tribunal requested the Commission and the parties to address it on
whether the relevant market was not a market for luxury accommodation in the
Western Cape, thus implying substitutability between Golf Estates developed
by Pearl Valley Group in Paarl and residential luxury apartments developed by
V&A Marina in the Cape Town area.
15] The parties stated that they had indeed considered that possibility but had
found very little data. 5 .The Investment Property Databank (IPD) does not have
data on Golf Estates and residential luxury apartments. Nor were they able to
find a sufficient basis for defining a market for the development of golf estates.
In addition, they stated that the market shares of the acquiring firm in the
5 Transcript p2.
4
development of the Pearl Valley Golf Estate will not continue indefinitely into
the future because upon completion the erven will be sold off and the developer
will exit that market. 6 They further stated that residential luxury apartments are
not substitutable with Golf Estates since upon buying into a Golf Estate a
person is entitled to become a member of a golf club and to a number of
amenities which are very different from the amenities that a person who buys
into a residential luxury apartment is entitled to.
The Tribunal is of the view that although the Commission did not fully
investigate the possibility of substitutability between Golf Estates and luxury
apartments, it is likely that the development of Golf Estates, in which ownership
is not retained by the developer, and the ownership of luxury apartments would
constitute separate product markets. However there is no need for the Tribunal
to conclusively decide on the relevant market since the acquiring firm intends to
develop the Pearl Valley Golf Estate and to exit that market in the future. 7
Public Interest
16] There are no public interest issues.
Conclusion
17] The merger is approved unconditionally.
________________ 26 June 2007
Y Carrim DATE
Tribunal Member
M Mokuena and M Holden concur in the judgment of Y Carrim
Tribunal Researcher : R Kariga
For the merging parties: LE Grange Hofmeyr Herbstein & Gihwala Inc.
For the Commission : I Selaledi, and M Mohlala (Mergers and Acquisitions)
6 It is not clear whether that is what will happen in this instance.
7 Transcript p4.
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