competition tribunal ' .. ,,., .,,.,,,,,
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM213Feb17
In the matter between:
REDEFINE PROPERTIES LIMITED
and
CIRANO INVESTMENTS 300 (PTY) LTD
in respect of a 17.31 percent undivided share in
the property letting enterprise known as the Galleria
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: Andiswa Ndoni (Presiding Member)
: Fiona Tregenna (Tribunal Member)
: Enver Daniels (Tribunal Member
: 22 March 2017
: 22 March 2017
: 12 April 2017
Reasons for Decision
Acquiring Firm
Target Firm
[1] On 22 March 2017, the Competition Tribunal ("Tribunal") approved the proposed
transaction between Redefine Properties Limited ("Redefine") and Cirano
Investments 300 (Pty) Ltd ("Cirano") in respect of a 17.31 % undivided share in
the property letting enterprise known as the Galleria ("Target Property'').
[2] The reasons for approving the proposed transaction follow.
1
Parties to the Proposed Transaction
Primary Acquiring Firm
[3] The primary acquiring firm is Redefine, a company incorporated in accordance
with the laws of the Republic of South Africa. It is listed on the Johannesburg
Securities Exchange and is not controlled by any firm. Redefine controls a
number of firms, including Pivotal Fund Limited ("Pivotal").
Primary Target Firm
[4] The business being acquired is a 17.31% undivided co-ownership share in a
property called the Galleria ("the Target Property"). The Target Property is
currently owned through a joint venture by Redefine (45%), Pivotal (20%), Cirano
(25%) and Abshelf 04 (Pty) Ltd (10%).
Proposed Transaction and Rationale
[5] Redefine will increase its shareholding in the joint venture by acquiring an
additional 17.31% interest from Cirano, thereby increasing it's shareholding to
62.31%.1 Post-transaction Redefine will control the Target Property.2
[6] The Target Property represents a prime redevelopment site and the proposed
transaction will allow Redefine to align with its investment strategy
. From Cirano's perspective, the planned
redevelopment of the Target Property
Cirano's investment strategy.
Relevant Market and Impact on Competition
1 Pivotal intends acquiring the remaining 7.69% interest from Cirano, increasing it's shareholding to
27.69%.
2 Post-transaction Redefine will essentially hold a 90% shareholding , directly through Redefine
(62.31% ) and indirectly through Pivotal (27.69%), in the Target Property .
2
[7] Redefine is a property investment company, which holds a diverse range of
properties throughout South Africa. Relevant to the proposed transaction are
the Acquiring Group's office, retail and residential properties located in
Rosebank and surrounding areas.
[8] The Target Property is situated in Rosebank, Gauteng Province, and currently
comprises of 15 400m2 Grade B Office space and 1 017m2 retail space. The
Target Property, however, is in the process of being redeveloped and once
development is complete the Target Property will comprise 52 OOOm2 of Grade
P office space, 3 000m2 of retail space and 25 OOOm2 of residential space.
[9] As such the Commission found a horizontal overlap in the provision of rentable
space in office property, the provision of rentable space in retail property, and
the provision of rentable space in residential property. It analysed these as three
separate markets.
[1 O] With regards to the market for the provision of rentable office property the
Commission found a geographic overlap only in the provision of rentable Grade
B office space but considered that Grade A and P office property within the
Rosebank and adjacent nodes could constrain each other. 3
[11] In the market for the provision of rentable office property the Commission found
that, post-transaction, the merged entity will account for 23.34% of the Grade B
office property market and 16. 7% of the Grade P and A office property market.
In the market for the provision of rentable retail property the merged entity will
have a market share of 6.6% post-transaction. Furthermore, the merged entity
will continue to face competition from other players, including Growthpoint and
Liberty as well as other new developments and convenience centres.
[12] In terms of the market for the provision of rentable residential property, the
rentable residential spaces in the final developed property will be sold to the
3 This is in accordance with the approach adopted by the Tribunal in Investec Property (Pty) Ltd and
Spareprops (Pty) Ltd in respect of Erf 247 Rosebank Township (019307).
3
general public and not kept by Redefine. As such the Commission did not assess
the competitive effects in this market any further.
[13] The Commission is therefore of the view that the proposed transaction is unlikely
to substantially prevent or lessen competition in any of the relevant markets. We
concur with this finding.
Public Interest
[14] The merging parties confirmed that the proposed transaction will not result in any
adverse effect on employment as Cirano does not currently employ any
employees in respect of the Target Property.4
[15] The Commission was of the view that the proposed transaction is unlikely to raise
concerns on any other public interest grounds.
Conclusion
[16] In light of the above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market or raise any
adverse public interest issues. Accordingly, we approve the proposed transaction
unconditionally.
12 April 2017
Ms Andiswa Ngo DATE
Prof Fiona Tregenna and Mr Enver Daniels concurring
Tribunal Researcher:
For the merging parties:
For the Commission:
• Page 47 of the Merger Record .
Hayley Lyle
Vani Chetty of Baker & McKenzie
Zintle Siyo
4
I