COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM065Jul22
In the large merger between:
K2018366052 (South Africa) (Pty) Ltd;
K2018366028 (South Africa) (Pty) Ltd;
K2018365994 (South Africa) (Pty) Ltd;
K2018365955 (South Africa) (Pty) Ltd;
K2018365895 (South Africa) (Pty) Ltd; and
K2019451018 (South Africa) (Pty) Ltd
Primary Acquiring Firms
And
Castleview Property Fund Ltd Primary Target Firm
[1] On 7 September 2022, the Competition Tribunal (“Tribunal”) unconditionally
approved the large merger between K2018366052 (South Africa) (Pty) Ltd;
K2018366028 (South Africa) (Pty) Ltd; K2018365994 (South Africa) (Pty) Ltd;
K2018365955 (South Africa) (Pty) Ltd; K2018365895 (South Africa) (Pty) Ltd; and
K2019451018 (South Africa) (Pty) Ltd (collectively the “Acquiring Firms”) and
Castleview Property Fund Limited (“Castleview”).
Primary acquiring firms
[2] The Acquiring Firms are all wholly owned by K2021910222 (South Africa) (Pty) Ltd
which is in turn wholly owned by I Group Investments (Pty) Ltd (“IGI”). IGI is in turn
wholly controlled by the its trustees
and all the firms controlled directly and indirectly by them, are collectively referred
to as the "Acquiring Group".
Panel : T Vilakazi (Presiding Member)
: Y Carrim (Tribunal Member)
: F Tregenna (Tribunal Member)
Heard on : 07 September 2022
Reasons issued on : 15 September 2022
REASONS FOR DECISION
wholly controlled by the its trustees
[3] The Acquiring Group is a property investment firm with a diversified property
portfolio comprising of retail, industrial, office, and residential properties throughout
South Africa.
Primary target firm
[4] Castleview Property Fund Limited (“Castleview”) is a firm incorporated in
accordance with the laws of South Africa. Castleview is controlled by Urban Retail
Property Investments 1 (Pty) Ltd (“URPI”), which is in turn wholly controlled by
Investment Property Equity En Commandite partnership (“IP Equity”).
[5] Castleview wholly controls FEC Prop (Pty) Ltd (“FEC”). FEC owns the immovable
properties and rental enterprises known as "Pier 14" situated in the Nelson
Mandela Metropolitan Municipality1 and "Cravenby" situated in the City of Cape
Town Metropolitan Municipality2 (collectively, the "Target Properties"). Castleview
and all firms currently controlled by it (including the Target Properties) are
collectively referred to as the "Target Group".
[6] The Target Group is a property investment firm that owns properties, classified as
residential, small region centres, and local convenience centres.
Description of the proposed transaction
[7] The proposed transaction involves a reverse take-over by the Acquiring Group of
Castleview and is structured as follows:
7.1. Castleview will acquire various properties and shares held by the Acquiring
Group through six separate, but inter-related transaction steps for an
aggregated purchase consideration to be settled by the issue of Castleview
consideration shares to the Acquiring Firms ("Consideration Shares").
7.2. Once the Consideration Shares have been issued, the Acquiring Firms intend
to acquire 88% of the issued share capital of Castleview. Post-merger,
Castleview will be solely controlled by the Acquiring Firms.
Competition assessment
[8] The Competition Commission (“Commission”) considered the activities of the
merging parties and found horizontal overlaps in respect of rentable residential
merging parties and found horizontal overlaps in respect of rentable residential
property and rentable retail property. Accordingly, the Commission assessed the
effects of the proposed transaction in the market for rentable residential property
within an 8km radius of the Target Group’s Pier 14 residential property; and the
1 Which consists of erven no. 3801 and 3536 held under title deed no. T19792/2007 and
T20268/1994.
2 Which consists of erven no. 33262 held under title deed no. T24660/2021.
market for local convenience centres within a 10km radius of the Target Group’s
Cravenby shopping centre.
[9] In the market for rentable residential property within an 8km radius of the Target
Group’s Pier 14 residential property, the Commission found that the merging
parties will have a post-merger market share of 9.77%. Furthermore, the merging
parties will continue to face competition within the 8km radius from various players.
These include Remax, Pam Golding, Sotheby, and Beachfront Properties.
[10] With respect to the market for local convenience centres within a 10km radius of
the Target Group’s Cravenby shopping centre, the Commission found a post-
merger market share of 6.47%, and that the merged entity will be constrained by
alternatives such as Howard Centre, Bothasig Shopping Centre, Plattekloof Village
Shopping Centre, Delft Mall, and Nyanga Junction.
[11] Agents and competitors raised no concerns.
[12] On this basis, we found that the proposed transaction will not lead to substantial
prevention or lessening of competition in any relevant market.
Public interest
Employment
[13] The merging parties provided an unequivocal statement that the proposed
transaction will not result in any merger-specific retrenchments or job losses. In
addition, the merging parties submitted that the employees within the Target Group
will continue to be employed as per the terms of their current employment
contracts.
[14] The employee representatives of the Acquiring Group and the Target Properties
were contacted by the Commission. Both employee representatives confirmed that
their respective employees were notified of the proposed transaction and no
concerns were raised.
Spread of ownership
[15] The Acquiring Group and the Target Group do not have any historically
disadvantaged person (“HDP”) shareholdings. As such, the proposed transaction
does not result in any dilution of HDP shareholdings.
[16] The merging parties indicated to the Commission that they would find a Black
[16] The merging parties indicated to the Commission that they would find a Black
Economic Empowerment (“BEE”) partner for the merged entity within 24 months
from the approval date of the proposed transaction. While discussions with
potential BEE partners are on-going, potential BEE partners have exited talks
because of failing to secure funding. However, the merging parties stated that
Castleview has raised investment capital from
for an effective 4% shareholding into Castleview. indicated that it will
use its best reasonable endeavours to find a BEE partner for itself within the next
24 months, subject to funding of said shareholding.
[17] Upon the Tribunal’s request, the merging parties provided a letter in which they
undertake to provide an update to the Commission in relation to the status and
details of proposed BEE partner within 24 months of the approval date of
the proposed transaction.
[18] In light of the above, the proposed transaction is unlikely to have any negative
effects on employment or raise any other public interest concerns.
Conclusion
[19] We conclude that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market, or to have a negative impact on public
interest.
15 September 2022
Dr Thando Vilakazi Date
Ms Yasmin Carrim and Prof Fiona Tregenna concurring
Tribunal Case Manager: Leila Raffee
For the Merging Parties: Susan Meyer and Luyolo Mfithi of Cliffe Dekker
Hofmeyr Inc
For the Commission: Tumiso Loate and Themba Mahlangu