COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 95/LM/Sep07
In the matter between:
ACUCAP PROPERTIES LIMITED Acquiring Firm
And
INTAPROP INVESTMENT (PTY) LTD Target Firm
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Panel : U Bhoola (Presiding Member), Y Carrim (Tribunal
Member), and M Holden (Tribunal Member)
Heard on : 17 October 2007
Decided on : 17 October 2007
Reasons issued on : 29 October 2007
REASONS FOR DECISION
APPROVAL
[1] On 17 October 2007, the Tribunal approved the merger between Acucap
Properties Limited ( “Acucap”), and Intaprop Investments (Pty) Ltd ( “Intaprop”).
THE TRANSACTION
[2] Acucap, the primary acquiring firm, is a property loan stock company listed in the
JSE Limited. It is not controlled by any firm. It controls a number of firms.
[3] Intaprop, the primary target firm, is not controlled by any firm. It controls Intabrink
Investments (Pty) Limited and Illovo Boulevard Piazzas (Pty) Limited.
[4] In terms of the Sale of Shares Agreement, Acucap is acquiring 100% of
Intaprop’s issued share capital from its ordinary share holders. 1 The transaction
will result in Acucap acquiring sole control over Intaprop and its subsidiaries, namely
Intabrink Investments (Pty) Ltd and Illovo Boulevard Piazzas (Pty) Limited.
RATIONALE FOR THE TRANSACTION
[5] Acucap, which is primarily involved in retail property, wants to diversify its portfolio
through the acquisition of Grade A office property from Intaprop.
THE PARTIES’ ACTIVITIES
[6] The primary acquiring firm is active in the market for the provision of rentable retail,
office, and industrial space. It owns 16 retail properties, 2 48 office properties 3 and 11
industrial properties country wide. In addition, through its wholly owned subsidiary,
Atlas Properties Limited ( “Atlas”), Acucap provides property asset management,
broking; project management and property development services.
[7] The target firm is active in the market for rentable retail and office property. It has
two retail properties, 4 and seven grade A office properties. Both of the target firm’s
properties are situated in Gauteng.
THE RELEVANT MARKET
1 The ordinary shareholders are: The Pendennis Investment Trust; The Windermere Investment
Trust; The Unity Trust; The Zambezi Trust; and Neville Dale Gordon.
2 This includes 1 local convenience in Westville, Durban; 7 neighbourhood retail properties; 6
community retail properties; 1 minor retail property; and 1 supper regional retail property.
3 This includes 23 Grade A office properties held throughout South Africa.
4 One of which is a local convenience.
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[8] The broad market is that of retail and office property. The merging parties’
activities overlap in two narrower markets, namely retail local convenience market and
the market for rentable Grade A office space. In the retail local convenience market, the
acquiring firm has a local convenience property in Westville, Durban and the target firm
has one in Illovo, Gauteng. However, since the properties are situated in different areas
there is no geographic overlap in the activities of the parties in this market.
[9] In the market for rentable Grade A office space, the acquiring firm has twenty three
properties, five of these are located in the Sandton node. The primary target firm has
seven Grade A office properties in the Sandton node. Hence the only relevant
horizontal market for competition evaluation is the market for rentable Grade A office
space in the Sandton node.
[10] The transaction will also result in a vertical integration. The acquiring firm, through
Atlas, carries on the business of property asset management, project management and
property development, while the target firm does not.
COMPETITION ANALYSIS
[11] The acquiring and target firms’ market shares premerger are 1.2% and 2.3%,
respectively. The merged entity is estimated to have a relatively low market share of
3.5% post merger. The market share accretion is low and the transaction is unlikely to
substantially prevent or lessen competition.
[12] There is a vertical dimension to the transaction in that Acucap via Atlas provides
property asset management; broking; project management; and property development
services to property owners. The target firm does not provide these services. However,
the target firm purchases such services from Kagiso Property Development (Pty)
Limited (“Kagiso”). Kagiso does not provide its services to the open market but
provides them exclusively to the target firm for its internal portfolio.
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[13] Given the above, it is our view that this transaction is unlikely to lead to a
substantial lessening or prevention of competition.
CONCLUSION
[14] We find that the transaction does not raise any significant public interest issues
and accordingly approve the merger without conditions.
_______________ 29 October 2007
Y Carrim Date
U Bhoola and M Holden concurring.
Tribunal Researcher : P S Munyai
For the merging parties : Vani Chetty Competition Law
(Proprietary) Limited
For the Competition Commission : M Dasarath and HB Senekal
(Mergers & Acquisitions)
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