About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2014
>>
[2014] ZACT 65
|
|
Redefine Properties Limited v Macsteel Genprop (Pty) Ltd and Another (019406) [2014] ZACT 65 (3 October 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 019406
In the matter
between:
REDEFINE
PROPERTIES
LIMITED
.............................................................
Primary
Acquiring Firm(s)
And
MACSTEEL GENPROP
(PTY) LTD
and
MACSTEEL COREPROP
(PTY)
LTD
...............................................................................
Target
Firm(s)
Panel : Yasmin
Carrim (Presiding Member)
: Andreas Wessels
(Tribunal Member)
: Medi Mokuena
(Tribunal Member)
Heard on: 26
September 2014
Order Issued on: 26
September 2014
Reasons Issued on :
03 October 2014
Reasons for
Decision
Approval
[1] On 26 September
2014 the Competition Tribunal (“Tribunal”)
unconditionally approved an acquisition by Redefine Properties
Limited of 28 heavy industrial properties from Macsteel Genprop (Pty)
Ltd and Macsteel Coreprop (Pty) Ltd.
Primary acquiring
firm
[3]
The primary acquiring firm is Redefine Properties Limited
(“Redefine”), Redefine is a property loan stock company
listed on the Johannesburg Securities Exchange and currently holds
Real Estate Investment Trust (REIT) status. Redefine’s
shares
are widely dispersed with its major shareholder holding just 6.18% of
the issued shares.
1
Redefine owns a diversified property portfolio comprising office,
retail and industrial space situated throughout South Africa.
Primary target
firm
[4]
The primary target firms are Macsteel Genprop (Pty) Ltd (“Genprop”)
and Macsteel Coreprop (Pty) Ltd (“Coreprop”)
in respect
of 18 and 10 heavy industrial properties respectively ("the
Target Properties”), located throughout South
Africa.
2
Both Genprop and Coreprop are wholly owned subsidiaries of Macsteel
Service Centre SA (Pty) Ltd (“Macsteel”). Macsteel
is
incorporated in terms of the laws of the Republic and supplies much
of Sub-Saharan region with a full range of steel products.
Proposed
Transaction
[5] The transaction
before us is structured as a Sale Agreement and involves Redefine
acquiring sole control over the Target Properties
such that
postmerger Coreprop and Genprop cease to exercise any control over
the Target Properties.
[6] It is envisaged
that in addition to the transfer of control over the target
properties from Macsteel to Redefine, a lease agreement
will be
concluded in terms of which Macsteel will lease the Target Properties
from Redefine.
Rationale
[7] Redefine submits
that it views the acquisition of the Target Properties in line with
its strategy to diversify its property
portfolio and increase its
exposure to the heavy industrial properties sector.
[8] From Macsteel’s
perspective, the proposed transaction presents an opportunity to
divest from the area of property ownership
and management which it
considers non-core and to focus on its core competencies in steel
merchanting, processing and distribution.
Relevant Market
and Competition Analysis
[9] Having carried
out a comparison between Redefine’s property portfolio and the
Target Properties, the merging parties identified
just a single
overlap in the merging parties’ activities. That overlap is in
the market for rental space in heavy industrial
property in the
Germiston and surroundings node.
[10] The Competition
Commission (“Commission”) concurred with the merging
parties’ submission regarding market
definition and thus
proceeded to assess the competitive effects of the proposed
transaction on that market.
[11] The Commission
submitted that in the market for rentable heavy industrial space
within the Germiston and surroundings node,
the merged entity would
hold a market share of below 5% and that the transaction will not
alter the structure of the market whatsoever.
Public Interest
[12] The proposed
transaction has no effect on employment or any other public interest
consideration and thus no further consideration
in this respect is
warranted.
Conclusion
[13] We find that
the proposed transaction raises just a single overlap between the
merging parties’ activities and that the
merged entity’s
market share will be minimal, in light thereof we consider the
transaction unlikely to substantially prevent
or lessen competition
in the relevant market and accordingly approve the transaction
unconditionally.
03 October 2014
DATE
MS YASMIN CARRIM
Mr Andreas
Wessels and Ms Medi Mokuena concurring
Tribunal Researcher:
Shannon Quinn
For the merging
parties: Vani Chetty of Baker & Mckenzie.
For the Commission:
Dineo Mashego
1
A
mere three entities hold more than 5% of the issued shares in
Redefine, those being Stanlib, the Government Employees Pension
Fund
(GEPF) and State Street (Custodian).
2
The
reasons for approving the proposed transaction follow hereunder.