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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM137Dec21
Heriot Properties (Pty) Ltd Primary Acquiring Firm
And
Safari Investment (RSA) Ltd Primary Target Firm
Panel: M Mazwai (Presiding Member)
T Vilakazi (Tribunal Panel Member)
F Tregenna (Tribunal Panel Member)
Heard on: 2 March 2021
Order Issued on: 2 March 2021
Reasons Issued on: 18 March 2021
REASONS FOR DECISION
[1] On 2 March 2022, the Competition Tribunal (“Tribunal”) unconditionally approved a
large merger in terms of which Heriot Properties (Pty) (“Heriot Properties”)1 Ltd intends
to increase its shareholding in Safari Investment (RSA) Ltd (“Safari”) 2, thereby
acquiring control over Safari.
[2] Pre-merger, the Heriot Group owns 32.77% of the shares in Safari and intends to
acquire more Safari shares listed on the Johannesburg Stock Exchange Limited from
willing sellers on the open market, therefore, there is no merger agreement. The
1 Heriot Properties is a wholly owned subsidiary of Heriot REIT Limited (“HET"). The Heriot Group is a property
holding and investment company that owns a diversified portfolio of retail, industrial, commercial, and
specialised properties in South Africa.
2 Safari is a property-owning company, which is not controlled by any firm/s. It is listed on the JSE as a real estate
investment trust. The Heriot Group has shares in Safari through the Heriot Properties, Heriot Investments and
Reya Gola Investments (Pty) Ltd.
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acquisition of additional shares by the Heriot Group is likely to result in it having a
majority of the voting rights, thereby, giving it control over Safari. This is because,
according to the Heriot Group’s calculations, taking into account shareholder turnout
at the last five general meetings of Safari, the acquisition of additional Safari shares
will likely result in the Heriot Group being able to vote the majority of votes at future
Safari shareholders' meetings.
Competition Assessment
[3] The Competition Commission (“Commission”) considered the activities of the merging
parties and found that there is horizontal overlap between their activities. However,
based on Competition Tribunal precedent,3 the Commission concluded that there is no
geographic overlap as none of the properties owned by the Heriot Group are near the
target properties owned by Safari.
[4] The Commission also noted that the Heriot Group and Safari have a joint venture
called Polly Cat Security (Pty) Ltd. The joint venture was established to provide security
services to the respective property assets of the Heriot Group and Safari . It is not a
core business to either of the merging parties. The Commission evaluated whether the
merging parties’ structural connections through the joint venture may permit the
exchange of competitively sensitive information between both firm’s post -merger. It
found that there will be no cross directorships between Heriot, HET, Safari as joint
venture partners and Polly Cat.
3 Redefine/Pivotal Merger Competition Tribunal Case No: LM099Sep16; and Vukile Property Fund Limited and 5
properties owned by Encha Properties (Pty) Ltd Competition Tribunal Case No: LM038Jun13.
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[5] Furthermore, the information exchange concern is less likely since the merging parties
do not compete in the same geographic markets.
[6] No third party raised any concerns with the proposed transaction.
[6] Based on the above, the Commission concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition in the relevant market. We
concur with this finding.
Public Interest
Effect on Employment
[7] The Commission noted that the merging parties have no plans to retrench any
employees because of the proposed transaction. Therefore, the proposed transaction
will not adversely affect employment.
[8] The Commission concluded that the pr oposed transaction is unlikely to raise any
significant employment concerns post-merger.
Effect on the greater spread of ownership
[9] The merging parties submit that the Heriot Group is involved in various empowerment
projects. Employees of the Heriot Group currently hold of the shares in HET, as
Heriot Properties’ (which is 100% owned by HET). Safari’s B-BBEE shareholding is
10.36%. The merging parties submitted that the acquisition of shares in Safari will
result in the workers of the Heriot Group ind irectly benefitting from the increased
ownership of the Safari shares which promotes ownership as contemplated in section
12A(3)(e) of the Competition Act. Safari's existing B-BBEE shareholders will retain
their shareholding and the increase by the Heriot Group of its shares in Safari will not
result in any dilution of B-BBEE shareholding whatsoever. Therefore, the proposed
transaction will have no negative impact on any Historic ally Disadvantaged Persons
("HDPs”) shareholding within the Heriot Group or within Safari.
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[10] The Commission concluded that the proposed transaction is unlikely to have a
negative impact on the promotion of a greater spread of ownership.
Other public interest issues
[11] The proposed transaction raised no other public interest concerns.
Conclusion
[12] For the above reasons, we concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market, or to have a
negative impact on the public interest.
18 March 2022
Ms Mondo Mazwai
Date
Dr Thando Vilakazi and Professor Fiona Tregenna
Tribunal Case Managers: Sinethemba Mbeki and Camilla Mathonsi
For the Merging Parties: Graeme Wickins of Werksmans Attorneys
For the Competition: Portia Bele and Grashum Mutizwa