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[2015] ZACT 27
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Redefine Properties Limited v Hyprop Investment Limited in Respect of Stoneridge Shopping Centre (020628) [2015] ZACT 27 (24 March 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 020628
In the matter
between:
REDEFINE
PROPERTIES
LIMITED
...................................................................................
Acquiring
Firm
And
HYPROP
INVESTMENTS
LIMITED
.........................................................................................
Target
Firm
IN RESPECT OF
STONERIDGE SHOPPING CENTRE
Panel: Medi Mokuena
(Presiding Member)
: Anton Roskam
(Tribunal Member)
: Imraan Valodia
(Tribunal Member)
Heard on: 4 March
2015
Order Issued on: 4
March 2015
Reasons Issued on:
24 March 2015
Reasons for
Decision
Approval
[1] On 4 March 2015,
the Competition Tribunal (“Tribunal”) unconditionally
approved the merger between Redefine Properties
Limited (“Redefine”)
and Hyprop Investments Limited in respect of the Stoneridge Shopping
Centre (“Hyprop”).
[2] The reasons for
approving the proposed transaction follow.
Parties to
transaction and their Activities
Primary acquiring
firm
[3]
The primary acquiring firm is Redefine, a public company listed on
the Johannesburg Stock Exchange (“JSE”). Redefine
is not
controlled by any firm. The top beneficial shareholders of Redefine
holding more than 5% of its linked units include the
following:
Government Employees Pension Fund (7.80%), Investment Solutions
(5.12%), Stanlib (4.97%), Investec (3.96%), and Coronation
Fund
Managers (3.68%). Redefine controls a number of firms which make up
the Redefine Group.
1
[4]
Redefine is a property loan stock company listed under the
“
Diversified
Reits”
sector
on the JSE. It currently holds REIT status. Redefine holds a diverse
property portfolio which comprises of offices, retail
and industrial
space throughout South Africa. The retail properties of the Redefine
Group are of relevance to the current transaction.
These include
community centres, neighbourhood centres, major regional centres,
local convenience centres, minor regional centres,
speciality retail
(motor dealership), small free-standing centres and super regional
centres.
Primary target
firm
[5]
Redefine is acquiring Stoneridge Shopping Centre (“Stoneridge”),
which is owned by Hyprop. Hyprop has a number of
institutional
investors which, at varying degrees, hold stakes in Hyprop.
2
However, these investors do not influence the management or business
of Hyprop in any way nor do they have any appointments to
the Hyprop
board.
[6]
Hyprop is a professionally managed Real Estate Investment Trust, and
is listed on the JSE in the
‘
Retail
Reit’
sector.
Hyprop presently has a specialised portfolio of various properties
comprising of office and retail properties across South
Africa.
However, only Stoneridge Shopping Centre is relevant to the proposed
transaction.
Hyprop’s
Stoneridge Shopping Centre is a value centre located at Greenstone
Park in Edenvale, Gauteng.
Proposed
transaction and rationale:
[7] In the proposed
transaction, Redefine intends to acquire the Stoneridge Shopping
Centre as a going concern. Upon completion
of the proposed
transaction, Redefine will own Stoneridge Shopping Centre.
[8] Redefine’s
submitted rationale for the transaction is that it wants to grow and
diversify its property asset base to include
a retail component.
Hyprop submits that it is disposing of the Stoneridge value centre as
it does not form part of its core business.
Relevant Market
and Impact on Competition:
[9] The Competition
Commission (“Commission”) identified the relevant product
market to be the market for rentable retail
space, which can be
further divided into the narrow submarket for value centres since
Stoneridge is a value centre. The Commission
utilised a radius of
15km for its geographic assessment. Thus, the relevant market is
defined as the market for rentable retail
space (value centres)
within a 15km radius of Stoneridge Shopping centres.
[10] The Commission
considered the property portfolios of the merging parties to
determine whether any overlaps existed between
them. It found that
Redefine does not own any value centres and as such will be a new
entrant in the market.
[11] Although the
Commission was of the view that comparative centres do not compete
with value centres, it nonetheless considered
the “Freeway
Centre’, situated approximately 7km from Stoneridge, in its
assessment. Upon comparing the structure,
location and targeted
customers of the two centres and taking into account the views of the
relevant tenants and property managers,
the Commission concluded that
the Freeway Centre was not a viable alternative to Stoneridge.
[12] The Commission
therefore concluded that there are no overlaps between the activities
of the parties. Accordingly, the proposed
transaction is unlikely to
substantially lessen or prevent competition in the relevant market
Public interest:
[13] The Commission
concluded that there are no public interest concerns likeiy to arise
from the proposed transaction.
Conclusion:
[14] In light of the
above, we agree with the Commission's analysis and conclude that the
proposed transaction is unlikely to substantially
prevent or lessen
competition in the relevant market. In addition, no public interest
issues arise from the proposed transaction.
24 March 2015
DATE
Medi Mokuena
Anton Roskam and
imraan Valodia concurring
Tribunal Researcher:
Ammara Cachalia
For the merging
parties: Vani Chetty of Baker McKenzie
For
the Commission: Dineo Mashego
1
The
firms directly or indirectly controlled by Redefine are: Redefine
International pic, Madison Property Fund Managers Limited,
Fountainhead Property Trust Management Limited, Fountainhead
Property Administration (Proprietary) Limited, Fountainhead Property
Trust (South Africa), Redefine Retail (Proprietary) Limited,
Redefine Pacific (Mauritius), Annuity Properties Limited, Annuity
Asset Managers Proprietary Limited, Annuity Asset Managers
Proprietary Limited and Annuity Property managers Proprietary
Limited.
2
The institutional Investors include the Government Employees Pension
Fun, Stanlib, Coronation Fund Managers, Investment Solutions,
Old
Mutual.