COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 018762
In the matter between:
SA RETAIL PROPERTIES (PTY) LTD Primary Acquiring
Firm
And
AFHCO HOLDINGS Primary Target
Firm
Panel: Mr A Roskam (Presiding Member)
: Prof. I Valodia (Tribunal Member)
: Prof. F Tregenna (Tribunal Member)
Heard on : 18 June 2014
Order Issued on : 18 June 2014
Reasons Issued on : 16 July 2014
Reasons for Decision
Approval
[1] On 18 June 2014, The Competition Tribunal ("Tribunal") unconditionally
approved the acquisition by SA Retail (Pty) Ltd ("SA Retail") to acquire the entire
issued share capital in AFHCO Holdings (Pty) Ltd ("AFHCO"). Post- merger SA
Corporate Real Estate Fund ("SA Corp") will have sole indirect control over
AFHCO.
[2] The reasons for approving the proposed transaction follow.
Parties to the transaction
[3] The primary acquiring firm is SA Retail, a wholly owned subsidiary of SA
Corporate Real Estate Fund Nominee ("SACN"). SACN is controlled by SA Corp, a
company listed on the Johannesburg Securities Exchange. SA Corp's shareholders
with an interest of more than 5% include; Government Employment Pension Fund,
Coronation Fund Managers and Stanlib Asset Management. SACN holds 100%
shares in Blue Heron (Pty) Ltd, Dune Lark Investments, Erl 84-85-86 Shakes Head
(Ply) Ltd, Wood Ibis Investments (Ply) Ltd, Grey Heron Investments (Pty) Ltd,
Whirlprops 25 (Ply) Ltd, Rock Kestel Investments (Ply) Ltd and Stonedell
Investments (Ply) Ltd. SACN holds 75% shares in Umlazi Mega City (Pty) ltd,
[4] Th!l primary target firms is AFHCO, its shareholders include; IDEA Managed
Fund, Mr Wayne PJit and Ms Renney Plit. AFHCO holds 100% interest in various
companies including AFHCO (Ply) Ltd ("AFHCO Sub"), AFHCO Property (Ply) Ltd,
Urban Housing Finance (Ply). Ltd and Protea Glen Housing (Pty) Ltd. AFHCO Sub
controls more than 11 companies,
Proposed Transaction
[5] SA Corp through its subsidiary SA Retail intends to acquire the entire issued
share capital in AFHCO. Post-merger SA Corp will have sole indirect control over
AFHCO.
Rationale
[6] The proposed transaction offers SA Corp the opportunity to acquire an
established and experienced management team in the residential sector. For
AFHCO shareholders the sale provides an opportunity to realise their investment at
an appropriate time in their careers.
Relevant Market and Impact on Competition
[7] SA Retail group is a collective investment scheme which invests in property (also
known as a property unit trust). It has a total of 134 properties that comprises of 26
retail properties, 89 industrial properties and 19 office properties and they are all
located in the Gauteng Province. Relevant for this transaction are the 124 properties.
[8] AFHCO is a property investment company that has a total of 62 properties
comprising of 27 residential properties, 31 retail properties, 1 light industrial property
and 4 office properties mostly located within the Johannesburg Central Business
District ("CBD") and Newtown.
[9] The proposed transaction does result in horizontal overlap arising in relation to
provision of B-Grade and C-Grade office space, the m<;1rket for provision of
rental)le retail space in convenience centres and the market for provision of rentable
space in light industrial property.
[1OJ In the market for Grade B and C office properties 7 properties were identified
as overlapping post the transaction. However, the Competition Commission found
that there is no geographic overlap in the areas of rentable office space in B-Grade
and C-Grade and the market for the provision of rentable space in light industrial
property. The B-Grade and C-Grade properties. are not within the same node as
AFCHO, the B-Grade is within a 26km distance and the C Grade office properties
are within a 5km distance.
[11] The Commission also considered the market for provision of rentable space in
retail property within the 6km distance of the Johannesburg CBD node. In this node
SA Corp has a total GLA of 5506m' and a market share of 2.2% and AFHCO has a
total GLA of 40926 and a market share of 14.4%. SA Corp will have a post -merger
total GLA of 40926 and a market share of 14.4%. SA Corp will have a post -merger
market share of 16.6%. The Commission found that the parties post-merger
estimated market shares were not significant to raise competition concerns and
competitors in the market still have a market share of 83.4% and a GLA of 246
213m2. Competitors include; Bel Air shopping centre (7.3%), Centro Continental
(6.0%), Thrupps Centre (5.4%) and Bfamley shopping centre.
[12] In the market of provision of rentable space in light industrial property, the
Commission found that none of the SA Corp properties are located within the South-
West Industrial node where AFHCO's one property is located therefore there is no
geographic overlap.
Conclusion
[12] In light of the above we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in the market for provision of rentable of
8-Grade and C-Grade office space, the market far provision of rentable retail space
in convenience centre and the market for provision of rentable space in light
industrial property. In addition, no public interest issues arise from the proposed
transaction. Accordingly we approve the. proposed transaction unconditionally.
Prof. F Tregenna
Prof. I Valodia and Mr A Roskam concurring
DATE 16 July 2014
Tribunal Researcher: Moleboheng Moleko
For the merging parties: Desmond Rudman
For the Commission: