COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 05/LM/Jan11
In the matter between:
Hyprop Investment Limited and Atterbury
Investment Holdings Acquiring Firms
And
Attfund Retail Limited
and Mentrablox (Pty) Limited Target Firms
Panel : Norman Manoim (Presiding Member)
Andreas Wessels (Tribunal Member)
Yasmin Carrim (Tribunal Member)
Heard on : 06/04/2011
Order issued on : 06/04/2011
Reasons issued on : 04/05/2011
Reasons for Decision
Approval
1] On 6 April 2011 the Competition Tribunal (“Tribunal”) unconditionally approved
the proposed transaction involving Hyprop Investment Limited and Atterbury
Investment Holdings and Attfund Retail Limited and Mentrablox (Pty) Ltd. The
reasons for approval of the proposed transaction follow below.
Parties to transaction
2] The primary acquiring firms are Hyprop Investment Limited (“Hyprop”) and
Atterbury Investment Holdings (“AIH”) collectively referred to as the primary
acquiring firms. Both the primary acquiring firms are incorporated in accordance
with the laws of the Republic of South Africa. Hyprop is a listed company and as
such it is not controlled by any individual shareholder. The AIH is also not
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controlled by any individual firm.1
3] The primary target firms are Attfund Retail Limited (“Attfund Retail”) and
Mentrablox (Pty) Ltd (“Mentrablox”) collectively referred to as the primary target
firms. The primary target firms are incorporated in accordance with the laws of
the Republic of South Africa. Attfund Retail is not controlled by any individual
shareholder.2
Parties’ activities
4] Hyprop is a property loan stock company which specialises in prime shopping
centres and has a property portfolio comprised of retail and office space. It has a
specialised portfolio of ten properties. The Hyprop property portfolio comprises
office, hotel and retail properties located throughout South Africa, which includes
minor regional, regional and super regional shopping centres.
5] Redefine is a property loan stock company with a diversified property portfolio in
the rental property market, including office, retail and industrial sectors in various
locations throughout South Africa. AIH is part of the Atterbury Group. Atterbury
Group is an unlisted capital growth property fund, which invest in premium
commercial and retail assets in major South Africa metropolitan areas. Its
property portfolio consists of 12 properties, comprising rentable retail properties,
rentable office properties, and rentable industrial properties.
6] Attfund retail is an investment holding company with approximately twelve (12)
properties in retail and office sectors of the property market. Attfund Retail
conducts its own asset and property management functions internally. Word 4
Word marketing is involved in the marketing of approximately 36 shopping
centres and Mentrablox is a newly created limited liability company, which was
created by Attfund Retail to own Garden Route Mall. Garden Route Mall could
be described as a rentable retail space consisting of 53 557m.
Proposed transaction and rationale
Proposed transaction and rationale
1 The following are its major shareholders and their shareholdings: Redefine; Stanlib Fund; Old Mutual Fund;
and Standard Bank. Hyprop does not directly or indirectly control any firm. Redefine does not control any other
firm.
2 The following are its major shareholders: Atterbury Investment Holding Limited; (the primary acquiring firm
in the instant transaction); The Village Trust; Clidet No 683 (Pty) Ltd; and Y3K Investment (Pty) Ltd.
Mentrablox is a wholly owned subsidiary of Attfund Retail (the primary target firm in the instant).
7] In terms of the Acquisition Agreement entered into between Hyprop, Attfund
Retail and various other parties, Hyprop is acquiring the entire issued share
capital of Attfund Retail. This includes Attfund Retail property portfolio, its asset
management businesses 2 610 430 Acucap units, 8 897 297 Sycom units, and
Word 4 Word Marketing (Pty) Ltd (“Hyprop – Attfund transaction”).
8] Simultaneously with the Hyprop – Attfund transaction the parties have also
entered into another agreement in terms of which Atterbury Investment Holding
(“AIH”) intends to subscribe for 80% of ordinary issued share capital in
Mentrablox.
9] These two interrelated transaction are going to be implemented as follows:
Attfund Retail will first transfer one of its properties, a shopping centre known as
Garden Route Mall, to its wholly owned subsidiary Mentrablox; Hyprop will then
acquire the entire issued share capital of Attfund Retail; AIH will subscribe for
80% shares in Mentrablox and subsequently Attfund Retail shareholding in
Mentrablox will be sold to Hyprop; and AIH will have a call option to acquire
Hyprop’s shareholding in Mentrablox, after a two year period.
10] On completion of the Hyprop Attfund transaction, Hyprop will have sole control
over Attfund Retail and negative control over Mentrablox. On completion of the
Garden Route Transaction, AIH and Hyprop will have joint control over
Mentrablox and thus Garden Route Mall.
11] The proposed transaction will result in Hyprop having a stronger retail portfolio,
and thus creating a property portfolio well spread between office and high quality
retail properties with a complementary tenant mix. Attfund Retail believes the
proposed merger will result in attractive liquidity of its share to the benefit of both
current and future shareholders.
COMPETITION ASSESSMENT
12] The Commission found that the proposed transaction presents both horizontal
12] The Commission found that the proposed transaction presents both horizontal
and vertical overlaps. The horizontal overlap occurs in as far as the merging
firms are active in the provision of rentable retail space and the provision of
rentable office space. The vertical relationship between the activities of the
merging parties occurs in as far as the Word 4 Word, the other target firm in the
instant transaction is active in the provision of marketing services to retailers and
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property related projects.
13] The Commission finds that the proposed transaction is unlikely to substantially
prevent or lessen competition, as the market in which the parties compete are
fragmented with at least more than five (5) players active in the market. Further,
the Commission finds that tenants or customers of the merging firms have the
ability to negotiate for better rentals and the availability of other alternative
centres within a close proximity presents them with some degree of
countervailing power.
14] With respect to vertical overlap, the Commission finds that it is unlikely to result
in significant foreclosure concerns, as the market shares of the merged entity in
both markets remain low. Further, the Commission finds that both the markets in
which the merging firms competes are fragment with numerous players active in
those markets.
Public Interest
15] No public interest issues arise from the proposed transaction.
Conclusion
16] Based on the above we conclude that it is unlikely that the proposed transaction
would lead to a substantial prevention or lessening of competition in the relevant
market. Furthermore, no public interest concerns arise from this deal.
Accordingly the proposed transaction is approved unconditionally.
____________________ 04/05/2011
Ms Y Carrim Date
N Manoim and A Wessels concurring
Tribunal Researcher: Thabani Ngilande
For the merging parties: Vani Chetty
For the Commission: Themba Mahlangu