COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: 018002
In the matter between:
Growthpoint Properties Limited Primary Acquiring Firm
and
Abseq Properties (Pty) Ltd Primary Target Firm
Panel : Takalani Madima (Presiding Member)
Mondo Mazwai (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 20 November 2013
Order issued on : 20 November 2013
Reasons issued : 06 December 2013
DECISION
Approval
[1] On 20 November 2013, the Competition Tribunal (“Tribuna l”), in terms of
section 16(2)(a) of the Competition Act of 1998 1, approved the acquisition
by Growthpoint Properties Limited of Abseq Properties (Pty) Ltd.
[2] The reasons for approving the proposed transaction follow.
Parties to transaction
Acquiring firm
[3] The primary acquiring firm is Growthpoint Properties Limited
(“Growthpoint”), a property investment holding company which is listed as
1 Act No. 89 of 1998, as amended.
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a Real Estate Investment Trust on the Johannesburg Stock Exchange .
Growthpoint’s portfolio comprises rentable retail space, rentable office
space and rentable industrial space, of which the majority of properties are
located in Gauteng with the remaining properties located in Kwa -Zulu
Natal, Western Cape and Eastern Cape.2
Target firm
[4] The primary target firm is Abseq Properties (Pty) Ltd (“Abseq”) which is
primarily controlled by ABSA Bank Limited which in turn holds 85% of
Abseq, whilst the remaining 15% is held by Equity Estates (Pty) Ltd. Abseq
is active in the market for property investment and development which
owns retail, office and industrial space.3
Proposed transaction and rationale
[5] The proposed transaction comprises a two-step interlinked transaction,
which will ultimately result in Growthpoint acquiring the entire property
portfolio of Abseq. Following the implementation of the proposed
Growthpoint will have sole control over Abseq.
[6] From Growthpoint’s perspective, the rationale for this transaction is to
expand its property portfolio and its footprint in the Woodmead node.
[7] Equity Estate’s rationale for the proposed transaction is to dispose of the
property portfolio of Abseq in order to liquidate its investment.
Competition assessment
Overlaps
[8] The Commission found that the proposed transaction will result in a
horizontal product and geographic overlap in the market in respect of
rentable A-grade and B-grade office properties. The geographic overlap in
2 Please see page 13 of the Commission’s recommendations for the full list of
properties in the Growthpoint portfolio.
3 Please see page 49 of the record for the full list of properties in the Abseq portfolio).
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the market for the provision of rentable A -grade office properties occurs in
respect of six nodes, namely Illovo, Killarney/Houghton, Sandton,
Bryanston and Woodmead. The geographic overlap in respect of the
market for the provision of rentable B-grade office properties takes place in
the Woodmead node.
[9] The Commission found that the estimated shares in the aforementioned
markets pre - and post -merger are not significant. Furthermore, there are
numerous competitors in the same market, as well as up and coming office
developments in Sandton and Woodmead which will increase the
availability of alternative rentable office properties.
[10] We therefore conclude that the proposed transaction does not 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. 4 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 p ublic interest concerns arise as a result of the
proposed transaction. Accordingly, we approve the proposed merger
unconditionally.
_____________________ 06 December 2013
DR TAKALANI MADIMA DATE
Ms Mondo Mazwai and Mrs Medi Mokuena concurring
4 See page 76 of the merger record.
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Tribunal Researcher: Nicola Ilgner
For the Commission: Zanele Hadebe
For the acquiring firm: Johan Coetzee of Glyn Marais Inc.
For the target firm: Paul Coetser and Ahmore Burger-Smidt of
Werksmans Attorneys