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[2015] ZACT 116
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Redefine Properties Limited v Respublica Student Living (Pty) Ltd (LM087Jul15) [2015] ZACT 116 (7 September 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM087Jul15
In
the matter between:
REDEFINE
PROPERTIES
LIMITED
Primary Acquiring Firm
And
RESPUBLICA
STUDENT
LIVING (PTY)
LTD
Primary Target Firm
Panel
: Y Carrim (Presiding Member)
: M Mokuena (Tribunal
Member)
: lmraan Valodia
(Tribunal Member)
Heard
on
: 12 August 2015
Order
Issued on
: 12 August 2015
Reasons
Issued on
: 7 September
2015
Reasons
for Decision
Approval
[1]
On 12 August 2015, The Competition Tribunal
('Tribunal")
unconditionally approved the acquisition by Redefine Properties
Limited
("Redefine")
of 51% of the issued share
capital of Respublica Student Living (Pty) Ltd
("RSL")
from Bridgehead Real Estate Fund (Pty) Ltd
("Bridgehead").
[2]
The reasons for approving the proposed transaction follow.
Parties
to the transaction
Acquiring
firm
[3]
The primary acquiring firm is Redefine. Redefine is not
controlled by any one firm and its shareholders with more
than 5%
include: Government Employees Pension Fund, Redefine
Empowerment Trust Limited, State Street (Custodian) Corporation,
and
Stanlib Limited. Redefine controls various companies. Redefine and
its subsidiaries will be referred to as the "Redefine
Group".
[4]
Redefine is a property holding company, its portfolio comprises of
office, retail and industrial properties located throughout
South
Africa.
Target
firm
[5]
The target property is Respublica Student Living (Pty) Ltd
("RSL"),
a company wholly owned and controlled by Bridgehead. Bridgehead
is not controlled by any one firm and its shareholders with more
than
5% include: Bridgehead Investment (Pty) Ltd, Cledon Trading (Pty) Ltd
and Hanend Properties (Pty) Ltd. Bridgehead controls
the following
subsidiaries:
•
Respublica Capital (Pty)
Ltd,
•
Respublica (Pty) Ltd,
•
Respublica Developments
(Pty) Ltd,
•
Bridgehead Real Estate
Fund Trust, and
•
Bridgehead Real Estate
Fund Trust 2. RSL does not control any firm.
[6]
RSL owns, manages and develops rentable residential property mainly
for student accommodation in Johannesburg and Pretoria.
Proposed
Transaction and Rationale
[7]
Redefine intends to acquire 51% of the issued share capital
of RSL from Bridgehead. Post - merger
Redefine and
Bridgehead will jointly control RSL, as Bridgehead will remain with a
49% shareholding.
[8]
Redefine wants to enter the student housing market. Bridgehead
will have access to third party capital and will grow its
portfolio
of student accommodation.
Relevant
Market and Impact on Competition
[9]
The Commission considered the activities of the merging parties to
determine the relevant market for provision of residential
accommodation for students. It found that there is no horizontal
overlap between the activities of the merging parties as the Redefine
Group does not own any student accommodation. The Commission found
that there is a vertical overlap between the merging parties
as RSL
currently rents an office space property situated in Sandton from
Redefine. The Commission found that the vertical relationship
is
unlikely to result in any foreclosure concerns as this relationship
existed pre-merger and the status quo will remain the same
post
merger.
[10]
The Commission accordingly concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition
in the
relevant markets. We agree with this assessment.
Public
Interest
[11]
The merger will not result in any job losses or retrenchments
because all employees will remain employed by Respublica.
Therefore
the transaction does not raise any public interest concerns.
Conclusion
[12]
In light of the above we concluded that the proposed transaction was
unlikely to substantially prevent or lessen competition.
Accordingly
we approved the proposed transaction unconditionally.
7
September 2015
DATE
______________
Ms
Y Carrim
Ms
M Mokuena and Prof I Valodia concurring
Tribunal
Researcher:
Moleboheng Moleko
For
the merging parties:
Vani
Chetty and Lerisha Naidu - Baker & McKenzie
For
the Commission:
Billy Mabatamela, Seema Nunkoo and Xolela Nokele