competftion trlbunal
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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM099Sep16
In the matter between:
REDEFINE PROPERTY LIMITED
and
Primary Acquiring Firm
PIVOTAL FUND LIMITED
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
Primary Target Firm
: Yasmin Carrim (Presiding Member)
: Medi Mokuena (Tribunal Member)
: Mondo Mazwai (Tribunal Member)
: 16 November 2016
: 16 November 2016
: 12 December 2016
Reasons for Decision
[1] On 16 November 2016, the Competition Tribunal ("Tribunal") approved the proposed
transaction between Redefine Properties Limited and Pivotal Fund Limited.
[2] The reasons for approving the proposed transaction follow.
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Parties to proposed transaction
Primary acquiring firm
[3] The primary acquiring firms is Redefine Properties (Pty) Limited rRedefine"), a
company incorporated in accordance with the laws of the Republic of South Africa.
[4] Redefine is a public company listed on the Johannesburg Stock Exchange (JSE) and
is not controlled by any firm1.
[5] Redefine and all its subsidiaries will collectively be referred to as Redefine Group.
Primary target firm
[6] The primary target firm is Pivotal Fund Limited (NPivotal"), a firm incorporated in
terms of the laws of the Republic of South Africa.
[7] Pivotal is a public company listed on the JSE and is not controlled by any firm.
Proposed transaction and rationale
[8] Jn terms of the proposed transaction Redefine Group intends to acquire the entire
issued shares capital in Pivotal. Post-transaction Redefine Group will control Pivotal.
[9] Redefine Group submits that the proposed transaction is in line with its long term
strategy to diversify, grow and improve the quality of its local property asset base to
ensure sustainability.
[1 O] Pivotal submits that the proposed merger offers Pivotal shareholders the opportunity
to convert to a REIT structure and receive Redefine Group's share and in addition
shares in Echo Polska Properties N. V from which Pivotal shareholders will benefit
1 The top five beneficial shareholders of Redefine are as follows :
• Government employee pension fund 11.43%
• Redefine empowerment Trust 6.18%
• Stanlib 4.32%
• Coronation fund managers 3.52%
• Investment solutions 2.92%
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Impact on competition
[111 Redefine Group is a property investment group which owns a portfolio of office,
residential (student accommodation), retail, hospital, gymnasium, hotel and industrial
properties located throughout South Africa. Redefine Group's property portfolio is
managed in-house, through its property management subsidiaries Madison Property
Fund Managers Holdings Limited and Redefine Property Management Proprietary
Limited.
[12] Relevant to the proposed transaction are the office properties owned by the Redefine
Group in the Gauteng and Western Cape Provinces.
[131 Pivotal is a property investment and development fund with a portfolio comprising of
retail, office and industrial properties and vacant land located in Gauteng, Western
Cape and Free State Provinces.
[141 The merging parties both have interest in office, industrial and retail properties in their
respective portfolios. Therefore the proposed transaction gives rise to a horizontal
overlap in the provision of rentable office property and the provision of rentable retail
and industrial property.
[15] The Commission considered the activities of the merging parties and found that there
is a horizontal overlap in three (3) product markets namely the provision of rentable
office property, the provision of industrial property and the provision of rentable retail
property. The Commission identified the following geographic markets within the
three relevant markets
• The market for the provision of rentable space in Grade A office property in
the Constantia
• The market for the provision of rentable space in Grade A office property in
Bryanston
• The market for the provision of rentable space in Grade A office property in
Centurion
• The market for the provision of rentable space in Grade P office property in
Sandton
• The market for the provision of rentable space in Grade A office property in
Cape Town CBD
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• The market for the provision of rentable space in convenience centres within
a 1 O km radius of Hillcrest Boulevard Shopping Centre
• The market for the provision of rentable space in convenience centres within
a 10 km radius of Gateway Centre
• The market for the provision of rentable space in convenience centres within
a 10 km radius of Hazeldean Square
• The market for the provision of rentable space in comparative centres within a
15 km radius of Centurion Lifestyle Centre
• The market for the provision of rentable space in comparative centres within a
15 km radius of Wonderboom Junction and
• The market for the provision of light industrial property in the Elandsfontein,
Spartan/Kempton Park, lsando, Jet Park, Meadowdale, Sebenza/Germiston
Pomona and surrounding nodes (including Modderfontein)
[16] In all the markets identified above the Commission found that the merged entity will
continue to face significant competition constraints from other properties within the
relevant office, retail and industrial property markets. Furthermore the Commission
submits that the proposed transaction does not raise any foreclosure concerns.
[17) In light of the above, the Commission is of the view that the proposed transaction is
unlikely to substantially prevent or lessen competition within the relevant market.
Public interest
[18] The merging parties confirmed that the proposed transaction will have no negative
effect on employment.
[19] The proposed transaction further raises no other public interest concerns.
Conclusion
[20] In light of the above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market. In addition, no
public interest issues arise from the proposed transaction. Accordingly, we approve
the proposed transaction unconditionally.
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Ms. Yasmin Carnm
Mrs Medi Mokuena and Mrs Mondo Mazwai concurring
Tribunal Researcher:
For the merging parties:
For the Commission:
Busisiwe Masina
Vani Chetty of Baker & McKenzie.
Reabetswe Molotsi
12 December 2016
DATE
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