competitiontribunal
SOUTH AFRICA
COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
SKG Towers Proprietary Limited
And
The Immovable Property and Rental Enterprise Know
As Portion 1 of Erf 2909 Pretoria Township
Panel
Heard on
Order issued on
Reasons issued on
APPROVAL
: Y Carrim (Presiding Member)
: A Ndoni (Tribunal Member)
: H Cheadle (Tribunal Member)
: 15 January 2020
: 15 January 2020
: 05 February 2020
REASONS FOR DECISION
Case No: LM126Oct19
Primary Acquiring Firm
Primary Target Firm
[1] On 15 January 2020, the Competition Tribunal ("Tribunal") unconditionally
approved the proposed transaction between SKG Towers Proprietary Limited and
Portion 1 of Erf 2909, Pretoria Township.
[2] The reasons for the approval follow.
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PARTIES TO THE TRANSACTION
Primary Acquiring Firm
[3] The primary acquiring firm is SKG Towers Proprietary Limited ("SKG"), a wholly
owned subsidiary of Structured Mezzanine Investment Proprietary Limited ("SMI").
SMI is ultimately controlled by the trustees for the time being of the JP du Plessis
Family Trust ("JDP Trust"). SKG, JDP Trust, its controllers and all firms controlled
by JDP Trust are collectively referred to as the Acquiring Group.
[4] The Acquiring Group specialises in the development and leasing of commercial,
industrial and retail investment properties and owns a portfolio of 207 properties.
Primary Target Firm
[5] The primary target firm is the immovable property and rental enterprise known as
"Portion 1 Erf 2909, Pretoria Township" ('Target Property"). The Target Property is
wholly owned by Somnipoint Proprietary Limited ("Somnipoint").
[6] The Target Property is situated at 310 Pretorius Street, Pretoria Central, Pretoria.
PROPOSED TRANSACTION
Transaction background
[7] On or about 20 April 2014, Somnipoint and Vantage Mezzanine Fund II
Partnership, an en commandite partnership, acting through its ultimate general
partner Vantage Mezzanine Fund II Proprietary Limited ("Vantage") entered into a
Facilities Agreement. In accordance to the Facilities Agreement, Vantage agreed
to make certain loan facilities available to Somnipoint and as security for the credit
provided by Vantage, Somnipoint registered mortgage bonds over the Target
Property in favour of Vintage.
[8] Somnipoint subsequently defaulted under the Facilities Agreement. On 16 May
2019, Vantage obtained a High Court order against Somnipoint which, inter alia,
declared the Target Property specially executable, in favour of Vantage, and
specifically granted Vantage the right to freely sell the Target Property by way of
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private treaty sale and/or public auction. Pursuant to the court order, Vantage is
acting on behalf of the Target Property in this merger.
Proposed transaction
[9] In terms of the proposed transaction, Vantage is selling the Target Property as a
going concern to SKG by way of private treaty sale. Ultimately, SKG will have sole
control over the Target Property.
COMPETITON ANALYSIS
[1 OJ The Commission considered the activities of the merging parties and found that
the transaction presents a horizontal overlap in the market for rentable office space
in the Pretoria CBD. Post-merger, the Commission found that the merged entity
will have a low market share of less than 25% and a minimal accretion of just about
4%. Further, the merging parties will continue to face competition from competing
office properties owned by Citi Property, Redefined Properties, and Recoin
Properties, amongst others.
[11] Subsequent to the low market share and minimal accretion, the Commission was
of the view that the proposed transaction is unlikely to substantially prevent or
lessen competition.
PUBLIC INTEREST
[12] The merging parties submitted that the proposed transaction will not have any
adverse effect on employment and no retrenchments are anticipated as a result of
its implementation as the acquiring firm does not have any employees. Moreover,
no employees were employed in relation to the Target Property.
[13] In relation to the maintenance of the property post-merger, SKG will be
responsible for the management of the property.
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CONCLUSION
[14] In light of the above, we concluded that the proposed transaction is unlikely to
result in any substantial prevention or lessening of competition in any relevant
market. The merger transaction did not raise any employment concerns.
Accordingly, we unconditionally approved the proposed transaction.
i~
Ms Yasmin Carrim
05 February 2020
Date
Ms Andiswa Ndoni and Mr Halton Cheadle
Tribunal Case Managers
For the merging parties
For the Commission
: Lumkisa Jordaan
: Lara Granville for Cliffe Dekker Hofmeyr
: Busisiwe Ntshingila and Thabelo Masithulela
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