COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 46/LM/May07
In the matter between:
Public Investment Corporation Limited Acquiring Firm
And
CBS Property Portfolio Limited Target Firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal Member)
and M Mokuena (Tribunal Member),
Heard on : 18 July 2007
Order Issued : 18 July 2007
Reasons Issued: 13 September 2007
Reasons for Decision
Approval
1] On 18 July 2007, the Tribunal unconditionally approved the merger between
the Public Investment Corporation Limited and CBS Property Portfolio Limited.
The reasons for approving the transaction follow.
The parties
2] The primary acquiring firm is the Public Investment Corporation Limited (“PIC”),
acting in its capacity as agent to the Government Employees Pension Fund.
PIC is not controlled by any firm, and is an investment management company
wholly owned by the South African Government.
3] PIC controls various firms. For the purposes of this transaction the following
firms controlled by PIC are relevant:
[3.1] ADRIASA (Pty) Ltd;
[3.2] Black Ginger 33 (Pty) Ltd;
[3.3] Van Noppen Properties (Pty) Ltd;
[3.4] 1/1350 Zwartkop Centurion (Pty) Ltd;
[3.5] Erf 3342 Phalaborwa (Pty) Ltd; and
[3.6] Pareto Limited (40%), which is jointly controlled with ESKOM Pension and
Provident Fund.
4] The primary target firm is CBS Property Portfolio Limited (“CBS”), a company
incorporated under the company laws of the Republic of South Africa. CBS is a
public company listed on the JSE Securities Exchange and is not controlled by
any single firm. CBS controls various firms. 1
Description of the transaction
5] PIC is acquiring all of the units linked in issue in CBS, other than those it
already holds. 2 The proposed transaction will result in PIC acquiring control of
all the properties in the CBS property portfolio.
Rationale for the transaction
6] The PIC intends to increase the property portfolio under its management to
account for 58% of the total assets under PIC’s management.
The parties’ activities
7] PIC is an investment management company that invests in various asset
classes, including properties. PIC’s property portfolio consists of office
1 The firms controlled by CBS include Yieldgro Properties Limited, Riverband Trade and
Investment 4 (Pty) Ltd, CBS Property Management (Pty) Ltd, Nelesco 531 (Pty) Ltd, Clifton
Dunes Investment 399 (Pty) Ltd, Chestnut Hill Investments 266 (Pty) Ltd, Robstocks Parking
Garage Shareblock (Pty) Ltd, and 35 Wales Street Parking Garage Shareblock (Pty) Ltd.
2 PIC currently holds approximately 13.1% of the CBS linked units in issue.
2
properties, retail properties, industrial properties, residential properties,
specialised use properties and vacant land. 3
8] CBS is a variable rate property loan stock company. It is listed on the Financial
Services: Real Estate Holding and Development sector of the JSE Securities
Exchange. CBS derives its income from rentals paid by tenants occupying its
properties. CBS’s property portfolio consists of office properties, rental
properties, industrial properties, residential properties, hotel properties and
property used for educational purposes. 4
Competition analysis
9] The Commission submitted that there is no overlap in the activities of the
parties with regards to light industrial property, and retail property markets.
There is a slight overlap in the activities of the parties in the office property
market. In that regard, the Commission submitted that merging firms have a
combined post merger market share for grade P office space in Sandton node
of 2.6%, for grade A office properties in the Sandton node, 11% for grade B
office property in the Midrand node and 3.6% for light industrial property in the
Midrand node. These market shares are small and do not raise competition
concerns. As a result, the proposed transaction is unlikely to substantially
prevent or lessen competition.
Public Interest
10] There are no public interest issues.
Conclusion
11] The merger is approved unconditionally.
________________ 13 September 2007
D Lewis DATE
Tribunal Member
3 See p310318 of the record for a complete list of the properties implicated by this
transaction.
4 See p310318 of the record for a complete list of the properties implicated by this transaction
3
Y Carrim and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher : R Kariga
For the merging parties: M Van Hoven, Jowell Glyn and Marais Attorneys
For the Commission : M Dasrath and M Mohlala (Mergers and
Acquisitions)
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