About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2014
>>
[2014] ZACT 42
|
|
Growpoint Properties Ltd v Tiber Property Group (Pty) Ltd (018143) [2014] ZACT 42 (5 March 2014)
COMPETITION TRIBUNAL
OF SOUTH AFRICA
Case No.: 018143
In the matter between
Growthpoint Properties
Ltd
Acquiring Firm
And
Tiber Property Group
(Pty)
Ltd
Target Firm
Panel
Takaiani
Madima (Presiding Member)
Andreas Wessels (Tribunal
Member)
Medi Mokuena (Tribunal
Member)
Heard
on
30 January 2014
Order
issued on
30 January 2014
Reasons
issued on
05 March 2014
Decision
Approval
[1]
On 30 January 2014,
the Competition Tribunal (the “Tribunal”) unconditionally
approved the acquisition by Growthpoint
Properties Ltd
(“Growthpoint”) of Tiber Property Group (“Tiber
Property”).
[2]
The reasons for
approving the proposed transaction are as follows.
Parties
to transaction
[3]
The
primary acquiring firm is Growthpoint. Growthpoint is a property
investment holding company which is listed as a Real Estate
Investment Trust on the Johannesburg Securities Exchange. The
following entities are Growthpoint’s largest shareholders that
hold in excess of 5% of its shares as at 31 August 2013: Government
Employee Pension Fund (21.44%), Stanlib Property Income Fund
(6%) and
BEE Consortium (5.40%). Growthpoint wholly-owns a number of
subsidiaries.
[1]
Growthpoint’s property portfolio consists of rentable retail
space, rentable office space and rentable industrial space.
Relevant
to this transaction are the rentable office and retail properties
owned by Growthpoint in Johannesburg.
[4]
The primary target
firms comprise of a portfolio of properties belonging to Tiber
Property, Tiber Developments (Pty) Ltd (“Tiber
Developments")
and the properties co-owned by Tiber Developments and other
shareholders. Tiber Property and Tiber Developments
are private
companies incorporated in accordance with the laws of the Republic of
South Africa and belong to a group of companies
called the Tiber
Group and are managed by Tiber Projects (Pty) Ltd (“Tiber
Projects”).
[5]
The shareholders that
own more than 5% shares in Tiber Property are: Finacom Holdings SA,
Mulriv Holdings (Pty) Ltd, Francesco Rivera
Investment Holdings (Pty)
Ltd and Binandy Investments (Pty) Ltd. The shareholders that own more
that 5% shares in Tiber Developments
are: Francesco Rivera Investment
Holdings (Pty) Ltd, Owls Barn Trust, Estate F Rivera, A Rivera and
Germano Cardosso Family Trust.
[6]
The property portfolio
belonging to Tiber Property and its subsidiaries are rentable Grade
A, B, P office properties as well as
retail properties in
Johannesburg.
Proposed
transaction and rationale
[7]
The proposed
transaction comprises of a number of acquisitions by Growthpoint that
have been notified by the merging parties as
a single, indivisible
and interdependent transaction. These acquisitions are: (i) the
entire issued share capital of Tiber Property,
(ii) 50% of the issued
shares in and claims against each stand 1135 Houghton (Pty) Ltd,
(iii) the Tiber Group’s interest
in the property letting
enterprise conducted by Tiber Developments jointly with Momentum
Property Investments (Pty) Ltd, (iv) the
business of Tiber Projects
as a going concern, (v) subscription of shares in Down House
Investments (Pty) Ltd and (vi) the conclusion
of a contractual
relationship between Growthpoint and Brass Peak Trading (Pty) Ltd
(“Devco”).
[8]
Growthpoint submitted
that it wished to expand its property portfolio and gain access to
development pipeline to further add to
its property investment
portfolio.
[9]
According to Tiber
Group, the board of directors of each entity in the group have been
mandated to negotiate the disposal of the
property portfolio in order
to create liquidity for the shareholders and to maximise shareholder
value.
Relevant market and
impact on competition
[10]
The Commission
identified a horizontal overlap between the activities of the merging
parties in respect of the market for rentable
Grade A, B and P office
properties as well as rentable retail properties.
[11]
In respect of office
properties, the properties of the merging parties overlap as follows:
•
Grade
A offices - in the Bryanston, Illovo, Killarney/Houghton, Parktown
and Sandton and Environs nodes;
•
Grade
B offices - in the Rivonia, Rosebank, Sunninghill and Sandton and
Environs nodes and
•
Grade
P offices - in the Sandton and Environs nodes.
[12]
The Commission found
that the merging parties’ highest post-merger market shares are
in the Killarney/Houghton node (22%),
Parktown node (28.50%) and the
Sandton and Environs node (27%). In the remaining nodes the
post-merger market shares are between
3% to 20%. The Commission
contacted several customers and competitors of the merging parties in
order to get their views regarding
the proposed transaction.
[13]
The Commission was
informed by customers of the merging parties that they have some
degree of countervailing power (rental prices
are negotiated upfront
and customers usually know how much rentals they are going to pay
over the duration of their lease). These
customers further indicated
that there are other alternative office properties they can switch to
and that there has been an increase
in property development in prime
areas such as Sandton and Rosebank. Only one customer of the parties
raised concerns, namely,
Transnet. Transnet occupies grade A offices
belonging to Tiber Group in Parktown. Transnet submitted that in
terms lease agreement,
it has a right of first refusal on the sale of
these properties.
[14]
Transnet’s
concern is that the parties were supposed to be selling the
properties to it but this has not occurred. In response,
the merging
parties indicated that Transnet’s option to purchase the
properties becomes relevant only upon expiration of
the initial lease
period and the initial period has not expired. The merging parties
further indicated that the proposed transaction
constitutes a sale of
shares and the properties in question are not sold, which means that
the provisions dealing with this issue
in the lease agreement will
not apply. None of the competitors of the merging parties contacted
by the Commission raised concerns.
[15]
In respect of retail
properties, Growthpoint owns Blackheath shopping centre (situated
near Northcliff) and Tiber Group owns Grayston
Shopping Centre
(situated in Sandton). Although these two shopping centres are both
classified as convenience centres, the Commission
found that there is
no geographic overlap in respect of the properties as they are 14km
away from each other. However, regardless
of the exact product market
delineation, we find that the proposed transaction will not
substantially prevent or lessen competition
in this market in the
affected geographic area as there are other firms who compete with
the merging parties. Growthpoint also
owns Woodmead Retail Park which
is classified as a regional shopping centre and Tiber Group owns
Rivonia Crossing 1 and 2 which
are classified as value centres (both
properties are situated in Rivonia), The Commission found that there
is no overlap with these
properties as they are classified
differently.
Conclusion
[16]
I conclude that that
the proposed transaction is unlikely to substantially lessen or
prevent competition in any relevant market.
Public interest
[17]
The merging parties
confirmed that the proposed transaction will have no adverse effect
on employment and that it will not result
in any retrenchments.
Furthermore, the proposed merger raises no other public interest
concerns.
CONCLUSION
[18]
I therefore approve
the merger unconditionally.
05 March 2014
DAT E
Dr. Takalani Madima
Mr. Andreas Wessels
and Mrs. Medi Mokuena concurring
Tribunal
Researcher
: Ipeleng Selaledi
For the acquiring
firm : Johan
Coetzee of Glynn Marais
For the target
firms
: Paul Truterof Roodt Inc
For
the Commission
: Rakgole Mokolo
[1]
Refer to pages 1782 and 1783 of the record for a list of
Growthpoint’s subsidiaries.