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[2015] ZACT 111
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Investec Property Fund Limited v Certain target properties that are ultimately controlled by Griffin Holdings Proprietary Limited and Another (LM052Jun15, LM045Jun15) [2015] ZACT 111 (2 September 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM052Jun15;
LM045Jun15
In
the matter between:
I
nvestec
Property
Fund
Limited
Primary Acquiring Firm
And
Certain
target
properties
that are
ultimately
controlled
by
Primary Target Firms
Griffin
Holdings
Proprietary
Limited
and
Raidel
International Investments Limited
Panel
: Yasmin Carrim (Presiding Member),
: Mondo Mazwai (Triounal
Member)
: Imraan Valodia
(Tribunal Member)
Heard
on
: 06 August 2015
Order
issued on
: 06 August 2015
Reasons
issued on
:02 September 2015
Reasons
for Decision
Approval
[1]
On 06 August 2015 the Competition Tribunal ("Tribunal")
unconditionally approved the large merger between Investec
Property
Fund Limited ("the Fund") and certain target
properties that are ultimately controlled by Griffin
Holdings
Proprietary Limited ("Griffin") and Raidel International
Investments Limited ("Raidel"). The reasons
for approving
the transaction follow.
Parties
to the transaction
[2]
The primary acquiring firm is the Fund, a real estate
investment fund that is listed on the Johannesburg Securities
Exchange Limited ("JSE").
The
Fund's major shareholder is Investec Limited ("Investec"),
with a 43% shareholding. Investec is an international specialist
bank
and asset manager that provides a diverse range of financial products
and services to a niche client base in three principal
markets
namely: the United Kingdom, South Africa and Australia amongst
others. The Fund's main objective is to deliver long term
sustainable
growth to its shareholders. Of relevance to the proposed transaction
are the acquiring firm's industrial, retail and
office properties
located in Gauteng and Western Cape.
[3]
The primary target firms are 22 properties
("Target Properties") ultimately
controlled by
Griffin and Raidel. Griffin is 100% owned by Adias Investments
Proprietary Limited ("Adias") which
in turn is owned and
controlled by the Nobre Family Trust ("Nobre"). Of the
Target Properties 16 are controlled and owned
by Raidel, and the
remainder of the six are controlled and owned by Griffin. The Target
Properties consist of industrial, retail
showrooms and office
properties located in the Western Cape and Gauteng Provinces.
[4]
The Target Properties owned by Griffin consist of the following:
•
Grindrod, Portion 57,
Longmeadow Business Estate Ext. 2 (Grindrod); Kevro Falcon Forest,
Portion 58, Longmeadow Business Estate
Ext. 2 (Kevro Falcon); AGCO,
Portion 112 of the farm Rietfontein IR 63 (AGCO); Consol, Portion 118
of the farm Rietfontein IR 63
("Consol"); Commerce Corner,
Erf 556, Kensington B (Commerce Corner); and Kevro-Dunrose, Erf 13,
Longlake Ext 1 (Kevro
Longlake).
[5]
The Target Properties owned by Raidel consist of the following:
•
Danmar/Sabaru, Erf 68
Longmeadow Business Estate Ext. 3 (Danmar/Sabaru); International SOS,
Portion 1 of Erf 72, Grand Central Ext.21/
Remaining Extent of Erf
72, Grand Central Ext.21 (International SOS); National Urethane
Industries (New), Erf 546, lsando Ext.
3 (New National Urethane
Industries); National Urethane Industries (Old), Erf 536,
lsando Ext. 3 (Old National Urethane
Industries); North Safety, Erf
549, lsando Ext. 3 (North Safety); Armadillo, Erf 759, Spartan Ext.
25 (Armadillo); Baldwin Filters,
Portion 99 of Erf 602, Spartan Ext.
2 (Baldwin Filters); MTU, Portion 251 of Erf 602, Spartan Ext. 2
(MTU); Aluminco, Portion 96
of Erf 602, Spartan Ext. 2 (Aluminco);
Thistle Bakery, Portion 62 OF Erf 602, Spartan Ext. 2 (Thistle
Bakery); Plastichem, Portion
61 of Erf 602, Spartan Ext. 2
(Plastichem), Jotun Paints, Portion 95 of Erf 602, Spartan Ext. 2
(Jotun Paints); Coastal Air, Portion
241 of Erf 602, Spartan Ext. 2
(Coastal Air); Premier Foods Cape Town, Erf 150170, Epping
(Premier Food Cape Town); CMH, Erf
451, Randjespark Ext. 136 (CMH);
and So-So Trading, Erven 35191 & 35192, Milnerton (So-So
Trading).
[6]
While the acquisition of the target properties is planned to occur at
the same time by Investec the Commission requested Investec
to file
two separate notifications because it was of the view that the
acquisition constituted two separate transactions given
that Griffin
and Raidel are completely unrelated target firms. However, due to the
fact that ultimately post-merger all the properties
will be
controlled by the acquiring firm, the Commission decided to combine
the analyses of the proposed transactions.
Proposed
transaction and rationale
[7]
The proposed transaction entails the acquisition of the Target
Properties by a special purpose vehicle company ("SPV")
that is yet to be formed. This will be done in terms of the
Subscription and Share Buy-back Agreements. Griffin and Raidel will
transfer the Target Properties to the SPV. Post-merger the Fund will
have 100% controlling interest in SPV.
[8]
The acquiring firm submits that the property portfolio of the Target
Properties is a quality portfolio of scale and diversification,
which
will contribute to the strength of the Fund's existing real estate
fundamentals. For Raidel and Griffin,
the
proposed transaction gives them an opportunity to
dispose of the Target Properties and at the same
time realise their
investments in properties.
Competition
assessment
[9]
Based on the locations of the Target Properties(Gauteng and Western
Cape) and the activities of the merging parties, the Commission
identified six horizontal overlaps namely:
•
In the market for the
provision of rentable light industrial property within a broader node
encompassing the Kempton Park/ Spartan,
lsando, Elandsfontein,
Meadowdale, Linbro Park, Germiston and Pomona
nodes;
•
In the market for the
provision of rentable light industrial property within the
Epping/Airport/Maitland node;
•
In the market for the
provision of rentable light industrial property within the Montague
Gardens/Milnerton/Paarden Eiland
node;
•
In the market for the
provision of rentable speciality property/motor dealerships within a
15 km radius of the target speciality
property located in
Longmeadow (including Edenvale, Meadowdale, Bedfordview and
Germiston);
•
In the market for the
provision of rentable Grade B office property within the Midrand node
and
•
In the market for the
provision of rentable Grade B office property within the Randburg
node.
[10]
In all the markets identified, the Commission found that the
post-merger market shares in all the identified markets will be
between the ranges of 6-34%, with market share accretions between the
ranges of 1-23%. Furthermore in all of the relevant markets
the
merged entity will continue to be constrained by other market players
such as Growthpoint, Redefine and Acucap
Properties
Limited amongst others. This coupled with the fact that in most of
these markets there is vacant space for renting.
Based on this, the
Commission came to the conclusion that the proposed transaction will
not substantially prevent or lessen competition
in the identified
markets. We concur with the Commission on this finding.
Public
Interest
[11]
The proposed transaction will have no effect on employment and raises
no other public interest concerns.
CONCLUSION
[12]
We agree with the Commission's findings that the proposed transaction
is unlikely to substantially prevent or lessen competition
in the
identified markets. We therefore approve the transaction without
conditions.
02
September
2015
DATE
__________________
Ms
Yasmin Carrim
Ms
Mondo Mazwai and Prof. lmraan Valodia concurring.
Tribunal
Researcher:
Caroline Sserufusa
For
the merging parties:
Andile Nikani of Fluxmans Attorneys
For
the Commission:
Reabetswe Molotsi