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[2015] ZACT 102
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Emira Property Fund Limited v Pilot Investments 1 (Pty) Ltd in respect of a 50% undivided share in Buildings A, C, D, E and G1 known as Summit Place (LM119Aug15) [2015] ZACT 102 (30 November 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM119Aug15
In
the matter between:
Emlra
Property
Fund
L
i
m
i
ted
Primary
Acquiring
Firm
And
Pi
l
ot
Peridot
I
nvestments
1(Pty)
Ltd
Primary
Target
Firm
I
n
respect of a 50% undivided share
i
n
Bui
l
dings
A, C, D, E
and
G1 known as Summit Place
Panel
: Yasmin
Carrim
(Presiding
Member)
: Andiswa Ndoni
(Tribunal
Member)
: Medi
Mokuena (Tribunal
Member)
Heard
on
: 04 November 2015
Order
issued on
: 04 November 2015
Reasons
issued on
:30 November 2015
Reasons
for Decision
Approval
[1]
On 04 November 2015, the Competition Tribunal ("Tribunal")
unconditionally
approved
the
l
arge
merger
between
Emira
Property
F
u
nd
Limited ("Emira") and Pilot Peridot
I
nvestments
1
(Pty)
Ltd ("Pilot Peridot") in respect of a 50% undivided
share
in
Buildings
A,
C,
D,
E
and
G1
known
as
Summit
P
l
ace
("Target Enterprise").
The
reasons
for
approving
the
transaction
follow.
Parties
to
the
transaction
[2]
The
primary
acquiring
firm
i
s
Emira, a
public company
incorporated
i
n
accordance
with
the
l
aws
of
the
Republ
i
c
of
South
Africa
("RSA").
Emira
i
s
listed on the Johannesburg Securities Exchange Limited ("JSE").
Emira is not
controlled
by
any
firm.
Emira
controls various firms such as Freestone
Property
Holdings
Limited,
Menlyn
Corporate
Park
(Pty)
Ltd, and
Strategic
Real Estate Managers (Pty) Ltd amongst
others
("collectively
the "Acquiring
Group").
The
Acquiring
Group
owns
a
portfolio
of
properties
comprising of
retail, office and
industrial properties located throughout South Africa. Of relevance
to the current transaction are the Acquiring
Group's properties
located in Pretoria in the Gauteng Province.
[3]
The primary target firm is the Target Enterprise. The Target
Enterprise consists of Grade P office properties located at Summit
Place Office Park, 221 Garsfontein Road, Menlyn, Pretoria, in the
Gauteng Province. In addition to this, Building G1 of the Target
Enterprise is a vacant land that will be developed into a motor
showroom in the near future.
Proposed
transaction and rationale
[4]
The proposed transaction entails Emira acquiring 50% undivided share
of the Target Enterprise from Pilot Peridot. Post-merger,
Pilot
Peridot and Emira will have joint control over the Target Enterprise.
[5]
The acquiring group submits that the proposed transaction is in line
with its long term objective of building a quality portfolio
of
properties that have the potential to generate returns for its
shareholders. Pilot Peridot on the other hand submits that the
proposed transaction provides it with an opportunity to realise
assets for strategic reasons.
Competition
assessment
[6]
The proposed transaction gives rise to a horizontal overlap. This is
because both merging parties are active in the market for
the
provision of rentable office property.
[7]
The Competition Commission ("Commission") considered the
activities of the merging parties and found that the relevant
product
market is the market for the provision of rentable Grade A and P
office property within the broader node consisting of
the
Menlyn/Faerie Glen/Ashlea Gardens and the Lynwood/Menlo
Park/Persequor Park/Hazelwood nodes. This is because the Acquiring
Group has Grade P office property in Lynwood which is 1.3 kilometres
("km") from the Target Enterprise. The Commission's
investigation
revealed
that
the
post-merger
market
shares
of
the
merging
parties
will
be
l
ess
than
30%
with
a
market
share
accretion
of
l
ess
than
9%.
The Commission
was
satisfied
that
other
market
players
such
as
Vukile
Property
Fund
Limited,
Growthpoint
Properties
Limited
and
Redefine
Properties,
will
continue
to
constrain the
merging
parties
post-merger.
This
coupled with the
fact that there
is available space for
leasing,
as
well
as
new developments
in
the
i
dentified
market
that
will
serve
as
alternatives
to
tenants
post-merger. The
Commission
thus
concluded that
the
proposed
transaction
will
not
substantially
prevent
or
l
essen
competition
in any
market. We
agree with the Commission's finding.
Public
interest
[8]
The merging parties confirmed that the proposed transaction will not
have any
adverse
effect
on
employment
since
Pilot
Peridot
does
not
have
any
employees.
[1]
The
proposed
transaction
raises
no
other
public interest
concerns.
CONCLUSION
[9]
We agree with the Commission's finding that the proposed transaction
is unlikely to substantially prevent or lessen competition
in any
relevant market. We therefore approve the proposed transaction
without conditions.
30
November 2015
DATE
_________________
Ms
Yasmin Carrim
Ms
Andiswa Ndoni and Ms Medi Mokuena concurring
Tribunal
Researcher:
Caroline Sserufusa
For
the merging parties:
Andries Le Grange of Cliffe Dekker Hofmeyr
For
the Commission:
Thato Mkhize
[1]
See
page 63-64 of the merger record.