COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 06/LM/Jan12
In the matter between:
Sycom Property Fund Collective Acquiring Firm
Investment Scheme in property
And
Grapnel Property Investments (Pty) Ltd and
Changing Tides 91 (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Takalani Madima (Tribunal Member)
Heard on : 15 February 2012
Order issued on : 15 February 2012
Reasons issued on : 08 March 2012
Reasons for Decision
Approval
1] On 15 February 2012 the Competition Tribunal (“Tribunal”) approved
the merger between Sycom Property Fund Collective Investment in
property and two firms, namely Grapnel Property Investments (Pty) Ltd
and Changing Tides 91 (Pty) Ltd. The reasons for approving the
proposed transaction follow below.
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Parties to the transaction
2] The primary acquiring firm is Sycom Property Fund Collective
Investment in property (“Sycom”), a company who either directly or
indirectly invests in rental property in the retail and office space sectors
in Gauteng and the Western Cape. Pre-merger, Sycom owns a 70%
interest in Paarl Mall (Western Cape).
3] One of the primary target firms is Grapnel Property Investments (Pty)
Ltd (“Grapnel”) in respect of a 15% interest in Paarl Mall, located in the
Western Cape and a 100% interest in a property letting enterprise
known as Cadbury Office Block, located in Woodmead, Gauteng.
Grapnel is a property fund development, investment and management
company.
4] The second primary target firm is Changing Tides 91 (Pty) Ltd
(“Changing Tides”) in respect of a 15% interest in Paarl Mall. Changing
Tides is a property development and property investment company.
Proposed transaction
5] The proposed transaction is structured into three components as
follows:
a. Sycom’s acquisition of Cadbury Office Block from Grapnel as a
going concern.
b. Sycom’s acquisition of a 15% undivided share of Paarl Mall held
by Grapnel.
c. Sycom’s acquisition of a 15% undivided share of Paarl Mall held
by Changing Tides.
6] As a result of the transaction, Sycom will increase its current 70%
interest to a 100% interest in Paarl Mall by acquiring the remaining
30% from the target firms and will therefore exercise sole control over
both Paarl Mall and Cadbury Office Block.
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Rationale for transaction
7] The primary acquiring firm already holds a 70% interest in Paarl Mall
and would like to exercise sole control over Paarl Mall. The primary
acquiring firms feels that the acquisition of Cadbury Office Block would
be a good investment opportunity.
8] Grapnel wishes to reduces its debt and increase its capital for further
development opportunities.
Impact on competition
9] There is an overlap between the activities of the parties in the
geographic market for minor regional centres in the Paarl/ Wellington/
Franschhoek node in the Western Cape Province due to Sycom’s pre-
merger 70% interest n Paarl Mall.
10]An overlap exists in the market for rentable A-grade office space in the
Greater Woodmead node, located in the Gauteng Province, as both
Sycom and Grapnel own various A-grade office spaces in such node.
As a result of the transaction, Sycom’s estimated market share in the
relevant market will increase from 14.04% to 14.43% and therefore the
proposed transaction is unlikely to substantially prevent or lessen
competition.
Public interest
11]The merging parties confirmed that there will be no adverse effect on
employment as a result of the proposed transaction. 1 No other public
interest issues arise as a result of this transaction.
CONCLUSION
12]We conclude that the proposed transaction is unlikely to substantially
prevent or lessen competition in any relevant market. Furthermore, the
proposed transaction raises no public interest concerns. Accordingly,
1 See page 110 of the record.
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we approve the proposed merger unconditionally.
____________________ 08 March 2012
NORMAN MANOIM DATE
Yasmin Carrim and Takalani Madima concurring.
Tribunal researcher: Nicola Ilgner
For the merging parties: Vani Chetty Competition law
For the Commission: Mogalane Matsimela
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