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[2016] ZACT 34
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Respublica Student Living (Pty) Ltd v Midrand Varsity Lodge (Pty) Ltd and Others (LM245Mar16) [2016] ZACT 34 (22 April 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM245Mar16
In
the matter between:
Respublica
Student living (Pty)
Ltd
Acquiring Firm
and
Midrand
Varsity Lodge (Pty) Ltd,
Target
Firms
Masingita
Estates (Pty) Ltd and
Sam
King Investment Holdings (Pty) Ltd
in
respect of two property letting enterprises known as Midrand Student
Village
and
White
House
Lodge
Panel
: Yasmin Carrim (Presiding Member)
Andiswa Ndoni
(Tribunal Member)
Anton Roskam (Tribunal
Member)
Heard
on
: 22 Mqtch 2016
Order
issued on
: 22 March 2016
Reasons
issued on
: 22 April
2016
Reasons
for Decision
Approval
1.
On 22 March 2016 the Competition Tribunal (the "Tribunal")
unconditionally approved an acquiE)ition
by Respublica Student living
(Pty) Ltd ("Respublica") of Midrand Varsity Lodge (Pty) Ltd
("Midrand Varsity Lodge"),
Masingita Estates (Ply) Ltd
("Masingita Estates") and Sam King Investment Holdings
(Pty) Ltd ("Sam King Investment")
in respect of two
property letting enterprises known as Midrand Student
Village and White House Lodge.
2.
The reasons for the approval of the proposed transaction follow.
The
Parties and their activities
3.
The
primary
acquiring
firm
is
respublica,
a firm
incorporated
in term
of the
laws
of the
Republic
of
South
Africa.
Respublica
is
controlled
by
Redefine
Properties
Ltd
("Redefine
Properties")
[1]
and
Bridgehead
Real
Estate
Fund (Pty)
Ltd
("Bridgehead").
[2]
4.
Redefine Properties is listed on the Johannesburg Securities Exchange
Ltd and is not controlled by any firm.
As at 31 August 2015, the top
five beneficial shareholders of Redefine are as follows: Government
Employees Pension Fund (9.44%),
State Street (Custodian) (5.76%),
Star1lib Asset Management Ltd (4.33%), Redefin Empowerment Trust
(7.04%) and Coronation Fund
Managers Ltd (3.94%). Respublica does not
control any firm. The issued share capital of Bridgehead is held by
22 shareholders.
The top three shareholders of Bridgehead are:
Brighthead Investments (Pty) Ltd (49.86%), Cledon Trading (Pty) Ltd
(17.01%) and
Hanend Properties (Ply) Ltd (10.96%).
5.
Respublica owns, manages and dev:elops rentable residential
properties for the purpose of student accommodation.
It provides
fully serviced apartment to students in Pretoria and Johannesburg.
Redefine Properties owns a property portfolio comprising
of office,
retail and industries space throughout South Africa. Bridgehead is a
property investment company that holds a limited
number of
properties.
6.
The primary target firms are Midrand Varsity Lodge, Masingita Estates
and Sam King Investment (the "sellers"),
in respect of two
property letting enterprises known as Midrand Student Village and
White House Lodge (the "target enterprises").
The sellers
invest in the construction, management and maintenance of rentable
student accommodation. The target enterprises consist
of rentable
residential space for student accommodation and are located in
Midrand, Gauteng Province.
Proposed
transaction and rationale
7.
In terms of the Sale of Property Portfolio Agreements, Respublica
intends to acquire the target enterprises
and all related immovable
property, assets and lease agreements from the sellers. On
completion, Respublica will have sole control
over the target
enterprises.
8.
Respublica intends to grow its asset base in line with the forecast
growth objectives for the company' business.
9.
According to the sellers, the target enterprises intend to realise
their marketable immovable assets
and have identified Respublica as a
suitable purchaser.
Competition
Analysis
10.
The Commission found that there is a horizontal overlap between the
activities of the merging parties in relation to the
provision of
rentable space in residential properties used for student
accommodation. In respect of the relevant geographic market,
the
Commission found that residential properties located more than 8
kilometers apart do not pose a competitive constraint on each
other.
The Commission further found that the merging parties' respective
properties are located between 24 and 39 kilometers apart.
Given
this, the Commission is of the view that there is no geographic
overlap between the activities of the merging parties as
their
respective properties are located too far apart to be considered as
substitutes.
11.
The Commission therefore concluded that that the proposed transaction
is unlikely to substantially prevent or lessen competition
in the
market for the provision of rentable space in residential properties
used for student accommodation.
Public
interest
12.
The merging parties confirmed that the proposed transaction will have
no adverse effect on employment and will not result in
any
retrenchments in South Africa. The proposed transaction raises no
other public interest concerns.
Conclusion
13.
In light of the above, we agree with the Commission that the proposed
transaction is unlikely to substantially prevent or lessen
competition in the market for the provision of rentable space in
residential properties used for student accommodation as there
is no
geographic overlap between the activities of the merging parties.
Further, we agree with the Commission that proposed transaction
is
unlikely to result in significant public interest concerns. We
therefore approved the proposed transaction unconditionally.
22
April
2016
Date
_______________________
Ms
Yasmin Carrim
Ms Andiswa
Ndoni and Mr. Anton Roskam concurring
Tribunal
Researcher
: lpeleng Selaledi
For
the merging parti!fs
: yani Chetty of Baker & McKenzie Attorneys
For
the Commission
: Reabetswe Molotsi
[1]
In addition to Respublica, Redefine controls in excess of 20 firms.
See record, page 16 -
17 for a
list of these firms.
[2]
In addition to Respublica, Bridgehead controls in excess of 7 firms.
See record, pages 17
-
18