About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2015
>>
[2015] ZACT 95
|
|
Delta Property Fund Limited v Orthotouch Limited (LM073Jul15) [2015] ZACT 95 (25 November 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM073Jul15
In
the matter between:
Delta
Property
Fund
Limited
Primary Acquiring Firm
and
Orthotouch
Limited
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Andiswa Ndoni (Tribunal
Member)
: Anton Roskam (Tribunal
Member)
Heard
on
: 28 October 2015
Order
Issued on
: 28 October 2015
Reasons
Issued on
: 25 November 2015
Reasons
for
Decision
Approval
[1]
On 28 October 2015, the Competition Tribunal (''Tribunal")
unconditionally approved the merger between Delta Property Fund
Limited ("Delta") and Orthotouch Limited ("Orthotouch")
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
Primary
acquiring
firm
[3]
The primary acquiring firm, Delta is a property fund which is
publically listed on the Johannesburg Stock Exchange. It has
controlling interests in various office, retail and industrial
properties.
Primary
target firm
[4]
The primary target firm, Orthotouch is a property management company
which focuses on the development of commercial property
assets which
includes retail centres and corporate developments.
Proposed
transaction and rationale
[5]
In the proposed transaction Delta would acquire fifteen properties
("Target Properties") from Orthotouch. The properties
consist of twelve properties in Bloemfontein and three properties in
Nelspruit, Welkom and Kroonstad respectively. As a result
of the
implementation of the proposed transaction Delta would wholly own and
control the Target Properties.
[6]
Delta submitted that it has identified the Target Properties as an
attractive investment opportunity which is in line with its
overall
growth strategy. Orthotouch submitted that the proposed transaction
is an opportunity for it to realise sale proceeds.
Impact
on competition
[7]
The Commission, in its investigation identified a horizontal overlap
in respect of office property. The overlap identified by
the
Commission is only in relation to Grade B and C office properties in
Bloemfontein and Nelspruit as Delta owns office properties
in these
two areas.
[8]
In analysing the impact of the proposed transaction on the market for
Grade B and C office properties in Bloemfontein, the Commission
found
that the merged entity would have a post-merger market share of
between 40-45% with an accretion ranging between 35-38%.
The
Commission was of the view that, despite the high accretion rate, the
proposed transaction did not present competition concerns.
The
Commission came to this view on the basis that none of the tenants
raised any concerns about the proposed transaction and many
of the
larger tenants had medium to long terms leases. Furthermore regard
had to be given to the fact that government was one of
the biggest
tenants with substantial countervailing power and that a new
development of 8600m2 was expected to be developed by
2017 which
would act as constraints on the acquiring firm post- merger.
[9]
When evaluating the effect of the proposed transaction for Grade B
and C properties in Nelspruit, the Commission found that
the
post-merger market share would be between 15-20% with a minimal
accretion falling under 5%. The Commission was of the view
that as
both the market share and accretion was minimal that the proposed
transaction was unlikely to raise concerns in this market.
In this
market the Commission found mitigating factors such as that tenants
would be protected by their existing lease agreements
and that there
were suitable alternative vacant spaces.
[10]
On the evidence presented before us we are of the view that the
proposed transaction is unlikely to substantially prevent or
lessen
competition in any relevant market.
Public
interest
[11]
The
merging
parties
confirmed
that
the
proposed
transaction
will
not
result
in an
adverse
impact
on
employment.
[1]
The
proposed
transaction
further
raises
no
other
public
interest
concerns.
Conclusion
[12]
In light of the above, we approve the proposed transaction
unconditionally.
25
November 2015
DATE
________________________
Ms
Yasmin Carrim
Ms
Andiswa
Ndoni and
Mr Anton
Roskam
concurring
Tribunal
Researcher:
Aneesa Raval
For
the merging parties: Kitso
Tlhabanelo of Cliffe Dekker Hofmeyr
For
the Commission:
Relebohile Thabane and Nompucuko
Nontombana
[1]
Inter
alia
merger
record page 9.