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[2013] ZACT 113
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Fortress Income 2 (Pty) Ltd v Property letting Enterprise trading as Arbour Crossing And Galleria Shopping Centre (017806) [2013] ZACT 113 (20 November 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No.: 017806
In
the matter between:
Fortress
Income 2 (Pty)
Ltd Primamry
Acquiring Firm
and
The
property letting enterprises trading as
Primary
Target Firm
“
Arbour
Crossing” and “Galleria Shopping Centre”
Panel : Takalani
Madima (Presiding Member)
Mondo
Mazwai (Tribunal Member)
Anton
Roskam (Tribunal Member)
Heard : 16
October 2013
Order
issued on: 16
October 2013
Reasons
issued:
20 November 2013
DECISION
Unconditional
approval
[1]
On 16 October 2013, the Competition
Tribunal (‘Tribunal”) unconditionally approved the
proposed acquisition by Fortress
Income 2 (Pty) Ltd of the property
letting enterprises trading as “Arbour Town” and
“Galleria Shopping (Pty)
Ltd”.
[2]
The reasons for approving the proposed
transaction follow.
Parties
to transaction
[3]
The primary acquiring firm is Fortress
Income 2 (Pty) Ltd (“Fortress”). Fortress Income Fund is
a property loan stock
group which owns 109 investment properties in
South Africa comprising rentable retail, industrial and commercial
properties. Fortress
is a wholly-owned subsidiary of JSE-iisted
Fortress Income Fund Limited.
[4]
The primary target properties comprise
rentable retail properties classified as a major regional centre and
a lifestyle centre.
Arbour Crossing is classified as a lifestyle
shopping centre, whilst Galleria Shopping Centre is classified as a
regional shopping
centre. Both the target properties are located in
Amanzimtoti, KwaZulu-Natal. At the time of filing, the primary target
firms were
owned by Arbour Town (Pty) Ltd whose only business
activities related to its investment in Arbour Crossing and Galleria
Shopping
Centre.
Proposed
transaction and rationale
[5]
This
transaction follows a transaction which was unconditionally approved
by the Tribunal on 01 October 2013. Resilient Properties
(Pty) Ltd
(“Resilient Properties”) acquired the remaining 90% which
it did not already own in Arbour Town from Louis
Peens and the other
shareholders.
[1]
[6]
In
terms of the proposed transaction, Fortress will acquire 25%
undivided shares in the target properties. Fortress is not acquiring
any direct or indirect interest in Arbour Town. The remaining 75%
will be held by Arbour Town and Resilient Properties (with 65%
and
10% respectively).
[2]
Post-merger, Arbour Town will exercise sole control over the target
properties, while Fortress and Resilient Properties will exercise
joint control.
[3]
[7]
The
proposed acquisition is consistent with Fortress’ strategy of
increasing its exposure to retail properties.
[4]
Competition
assessment
Overlaps
[8]
The
Commission found that the proposed transaction will result in a
product overlap in the market for the provision of rentable
retail
property. However, the retail properties which form part of the
Fortress property portfolio are predominantly classified
as
convenience and neighbourhood centres.
[5]
[9]
Apart from one property of the acquiring
firm, which bears a different classification to the target
properties, all the acquiring
firm’s rentable retail properties
are located more than 25 kilometres from the target properties. Due
to this distance between
the two centres, no geographic overlap will
arise from this transaction.
Conclusion
[10]
We conclude that the proposed
transaction is unlikely to substantially prevent or lessen
competition in any relevant market.
Public
interest
[11]
The
merging parties confirmed that the proposed transaction will not have
any adverse impact on employment and that no retrenchments
will
result from the proposed transaction.
[6]
No other public interest issues arise as a result of this
transaction.
CONCLUSION
[12]
Having regard to the facts above, we
find that the proposed transaction is unlikely to substantially
prevent or lessen competition
in any relevant market. Furthermore, no
public interest concerns arise as a result of the proposed
transaction. Accordingly, we
approve the proposed merger
unconditionally.
20
November 2013
DATE
TAKALANI
MADIMA
Mondo
Mazwai and Anton Roskam concurring
Tribunal
Researcher: Nicola ligner
For
the Commission: Reabetswe Molotsi and Grashum Mutizwa
For
the merging parties: Susan Meyer of Cliffe Dekker Hofmeyr Inc.
[1]
See Resilient Properties (Pty) Ltd and Arbour Town (Pty) Ltd -
Tribunal case number 017772.
[2]
See page 6 of the Commission’s recommendations.
[3]
Telephone conversation between the Commission and the merging
parties’ legal representative on
[4]
October 2013.
4
SENS Announcement - 15 August
2013.
[5]
See page 46 of the merger record.
[6]
See page 2 of the merger record.