COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 118/LM/Nov08
In the matter between:
ABSA Bank Limited Acquiring Firm
And
Abseq Properties (Pty) Ltd
and
Equity Estates (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal Member),
and Y Carrim (Tribunal Member)
Heard on : 3 December 2008
Order Issued : 3 December 2008
Reasons Issued: 3 December 2008
Reasons for Decision
Approval
[1] On 3 December 2008, the Tribunal unconditionally approved the merger
between ABSA Bank Limited and Abseq Properties (Pty) Ltd and Equity
Estates (Pty) Ltd. The reasons for approving the transaction follow.
The parties
[2] The primary acquiring firm is ABSA Bank Limited (“ABSA Bank”), a public
company incorporated under the laws of the Republic of South Africa. ABSA
Bank is a wholly owned subsidiary of ABSA Group Limited (“ABSA Group”),
which in turn is controlled by Barclays Plc (“Barclays”), a public company listed
on the London, Tokyo, and New York stock exchanges. Barclays controls
several subsidiaries worldwide. In South Africa, Barclays does not control any
other firm except ABSA Bank. ABSA Bank controls various subsidiaries.1
1 The firms controlled by ABSA Bank include ABSA Mortgage Fund Managers (Pty) Ltd, ABSA
Brokers (Pty) Ltd, ABSA Stockbrokers (Pty) Ltd, ABSA Portfolio Managers (Pty) Ltd, Meeg
Bank Limited, ABSA Development Company Holding (Pty) Ltd, and Property 24 (Pty) Ltd.
[3] The primary target firms are Abseq Properties (Pty) Ltd (“Abseq”) and Equity
Estates (Pty) Ltd (“Equity Estates”) in respect of its office property known as the
Illovo Corner Property situated in Illovo.
[4] Abseq is jointly controlled by ABSA Bank (with 50% shareholding), The Pajan
Family Share Trust (with 29% shareholding), Equity Estates (Pty) Ltd (with 10%
shareholding), The Richardson Family Share Trust (with a 7% shareholding),
and The Regency Trust (with a 4% shareholding).
[5] Abseq controls various firms.2
[6] The Illovo Corner Property is owned by Equity Estates. Equity Estates has
three shareholders namely The Pajan Family Share Trust (with a 60%
shareholding), The Richardson Family Share Trust (with a 20% shareholding),
and the Regency Trust (with a 20% shareholding).
[7] The Pajan Family Share Trust, the Equity Estates, the Richardson Family
Share Trust and the Regency Trust do not control any other firm.
Description of the transaction
[8] The proposed transaction consists of two stages, which are interlinked and
conditionally depend upon each other. 3 In terms of the first stage, ABSA Bank
will increase its existing 50% shareholding in Abseq to 85%. On completion of
this stage, ABSA Bank will have sole control over Abseq.
[9] In terms of the second stage, ABSA Bank will acquire from Equity Estates the
Illovo Corner Property, a grade A office property situated in Illovo,
Johannesburg.
Rationale for the transaction
[10] The acquiring firm submitted that the proposed transaction forms part of a
wider strategy to secure returns on a suitable basis from investments in the
property market.
2 The firms controlled by Abseq are Ferns Investments (Pty) Ltd, High Properties Houghton
(Pty) Ltd, Kilkishen Investments (Pty) Ltd, and Stand 1135 (Pty) Ltd.3 The Commission has submitted that there are two separate transactions which have been
notified as intermediate mergers currently pending before the Commission under case
notified as intermediate mergers currently pending before the Commission under case
numbers 2008Oct4075 and 2008Nov4094. In those transactions ABSA intends to acquire
control over Ngwenya River Estate (Pty) Ltd and Cherry Vanilla Investments (Pty) Ltd.
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[11] Abseq submits that the proposed transaction forms part of a wider strategy to
develop and grow its asset base over a period two to three years.
[12] Equity Estates submitted that the proposed transaction forms part of a wider
strategy to secure returns on a suitable basis from investments in the property
sector.
The parties’ activities
Primary acquiring group
ABSA Bank
[13] ABSA Bank is active within the personal banking, corporate banking, wholesale
banking, financial services and insurance segments. ABSA Bank also invests in
office, retail and residential properties.
The primary target firms
Abseq
[14] Abseq is involved in property investment and development. It owns office,
industrial and retail properties.
The Illovo Corner Property
[15] The Illovo Corner Property is a grade A office property situated in Illovo.
Competition analysis
[16] The only area of overlap in the activities of the parties is in respect of grade A
office property in the Houghton node. ABSA Bank owns a grade A office
property situated at 1 River Street, in Houghton, Johannesburg. Abseq owns
grade A office space situated at 19, 21, 29 and 31 West Street, and 6-10 River
Road, in Houghton. However, this overlap is unlikely to substantially prevent or
lessen competition as ABSA Bank currently exercises joint control over Abseq
and is acquiring sole control in Abseq. Thus there is no change in the market
structure.
[17] There is no overlap between the properties owned by ABSA Bank and the
Illovo Corner Property.
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Public Interest
[18] There are no public interest issues.
Conclusion
[19] The merger is approved unconditionally.
________________ 3 December 2008
D Lewis DATE
Tribunal Member
N Manoim and Y Carrim concur in the judgment of D Lewis
Tribunal Researcher : R Kariga
For the merging parties: ABSA Legal – Office of the General Counsel.
For the Commission : M Mohlala (Mergers and Acquisitions)
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