COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 21/LM/May10
In the matter between:
Acucap Properties Ltd Acquiring Firm
And
Parkdev (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member),
Andreas Wessels (Tribunal Member) and
Medi Mokuena (Tribunal Member)
Heard on : 15 July 2010
Order issued on : 15 July 2010
Reasons issued on : 24 August 2010
Reasons for Decision
APPROVAL
1] On 21 July 2010 the Competition Tribunal (“Tribunal”) unconditionally
approved the acquisition between Acucap Properties Ltd and Parkdev (Pty)
Ltd. The reasons for approval follow below.
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PARTIES TO THE TRANSACTION
2] The primary acquiring firm is Acucap Properties Limited (“Acucap”), a
company incorporated in accordance with the laws of the Republic of South
Africa. Acucap’s major shareholders are Nedbank Ltd (6.58%), Thesele
Group (5.32%) and Government Employee Pension Fund (14.02%). Acucap
directly controls Acucap Investments (Pty) Ltd, Acucap Property Management
(Pty) Ltd, Sycom Property Fund Managers Ltd (“Sycom Managers”) and
Atlas Properties Ltd.
3] Through Atlas, Acucap controls Advent Properties (Pty) Ltd, Acucap
Management Services (Pty) Ltd and Atlas Property Developments (Pty) Ltd.
Through Sycom Property Fund Managers Acucap controls Sycom Property
Fund Collective Investment Scheme in the Property Portfolio (“Sycom Fund”),
FC Property Management Company (Pty) Ltd, Somerset Mall Property
Management Company (Pty) Ltd, Woodlands Office Park Property
Management Company (Pty) Ltd, Tyger Hills Office Park (Pty) Ltd and
CCG097 Share Block Company (Pty) Ltd.
4] The primary target firm is Parkdev (Pty) Ltd (“Parkdev”) in respect of the 50%
Asset Management Business, which includes the right to manage Sycom
Fund and 50% shares in Sycom Managers. Parkdev is controlled by Village
Trust.
DESCRIPTION OF THE TRANSACTION
5] The merging parties have entered into two different but interrelated
agreements i.e. the Sale of Undivided Shares Agreement and the Sale of
Shares Agreement. In terms of the Sale of Undivided Shares Agreement,
Acucap intends to acquire the remaining 50% undivided share of all its rights
and obligations under the asset management with Sycom Managers. In terms
of the Sale of Shares Agreement, Acucap intends to acquire the remaining
50% of the issued share capital in Sycom Managers from Parkdev. On
completion of the transaction, Acucap will have sole control of the
management of Sycom Fund’s Portfolio as well as sole control over Sycom
management of Sycom Fund’s Portfolio as well as sole control over Sycom
Managers.
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ACTIVITIES OF THE PARTIES
6] Acucap is a property loan stock company which invests in retail property
situated in major urban centres and retains the character of a diversified fund
investment in quality office nodes and in industrial parks. Acucap also
performs asset management functions for its own properties. The parties
further indicated that Acucap outsources certain other property management
functions to third parties on an arm’s length basis.1
7] Parkdev is active in the provision of asset management services, which
primarily consists of the right to manage Sycom Fund. Parkdev also manages
the unlisted property fund for Attfund Ltd (“Attfund”).
RATIONALE FOR THE TRANSACTION
8] Acucap sees this transaction as an opportunity to fulfil its long-term interest of
having full ownership of Sycom Managers, with the aim of advancing its
strategic objective of bringing the two businesses together in an appropriate
form. Parkdev, on the other hand, has decided to focus its attention on the
management of Attfund’s assets and properties in order to maximize Attfund
shareholders value. This is also in light of the fact that Parkdev doesn’t
participate in the daily decision making of the Sycom Fund portfolio.
COMPETITION ANALYSIS
9] The activities of the merging parties overlap in respect of the provision of
asset management. The Commission defined the geographic market for
these services as national. The combined post merger market share of the
merging parties for asset management is approximately 7%. There are many
firms competing in this market including Growthpoint, Old Mutual Group,
Sanlam Properties, Pangbourne Properties, RMB Properties, Resilient Group,
ABSA, Nedbank, etc.
10] There is also a vertical dimension to this transaction in that Acucap owns
properties which could be managed by asset managers. However, this will not
result in any foreclosure concerns as the value of Acucap’s properties
result in any foreclosure concerns as the value of Acucap’s properties
amounts to approximately 4%.
1 According to the parties, Acucap outsources these property management functions when it
does not have the required infrastructure to effectively conduct such functions.
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11] In light of the above, we find that the proposed transaction is unlikely to
substantially prevent or lessen competition in the relevant markets.
CONCLUSION
12] There are no significant public interest issues and we accordingly approve
the transaction.
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____________________ 24 August 2010
Norman Manoim DATE
Andreas Wessels and Medi Mokuena concurring.
Tribunal Researcher: Ipeleng Selaledi
For the merging parties: Vani Chetty Competition Law (Pty) Ltd
For the Commission: Themba Mahlangu
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