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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM163Dec22
In the large merger between:
Nedbank Limited, Acting Through its Nedbank
Corporate And Investment Banking Division,
Nedbank Property Partners
Primary Acquiring Firm
And
Emling Properties Proprietary Limited Primary Target Firm
Panel: A Wessels (Presiding Member)
T Vilakazi (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on: 13 March 2023
Order issued on: 13 March 2023
Reasons Issued on: 30 March 2023
REASONS FOR DECISION
Introduction
[1] On 13 March 2023, the Competition Tribunal (“the Tribunal”) unconditionally
approved the merger whereby Nedbank Limited (“Nedbank”) intends to
subscribe for 30% of the shares and acquire 30% of the claims in Emling
Properties Proprietary Limited (“Emling Properties”) from Capstone Assets
Proprietary Limited (“Capstone Assets”) and Mr Hylton David Herring (“Mr
Herring”).
[2] Upon the implementation of the proposed transaction, Emling Properties will be
jointly controlled by Nedbank, Capstone Assets and Mr Herring.
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Primary acquiring firm
[3] The principal services offered by Nedbank comprises business, corporate and
retail banking, securities trading, investment banking, private banking, foreign
exchange, wealth management and property financing.
[4] Relevant to the competition assessment is that Nedbank holds properties
through its Nedbank Group Properties Division, Nedbank Property Finance
(“NPP”) and more broadly across the group where properties have been acquired
through the perfection of security (properties in possession). The activities of
Nedbank which are most relevant are those of NPP through which, from time to
time (as an aside to Nedbank’s main business focus), it partners with Nedbank’s
property clients (which clients invest in property development projects). As such,
NPP’s activities sometimes include taking minority stakes in individual property
projects.
Primary target firm
[5] Emling Properties is a South African property investment firm, currently owned
50% each by Capstone Assets and Mr Herring. Emling Properties has three
property subsidiaries. Emling Properties and all of the firms it controls shall
collectively be referred to as “Emling Property Group.” Emling Property Group
holds retail property in the Gauteng province.
Competition assessment
[6] The Competition Commission (“the Commission”) considered the activities of the
merging parties and found that they overlap in relation to the provision of rentable
retail property in Gauteng.
[7] From a relevant product and geographic market perspective, the Commission
assessed the effects of the proposed transaction in a 5 – 10 km radius from the
following convenience centres owned by Emling Properties: (i) Shoprite
Boksburg; (ii) Voltex Ferndale; (iii) Voltex Pretoria; and (iv) Voltex Villieria. In
these respective markets, the Commission found that the merging parties have
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combined market shares of below 15%, based on the Gross Lettable Areas
(“GLAs”) of the properties in the respective areas.
[8] In addition, the retail properties of the merging parties will continue to be
constrained by a number of other convenience centres in each of the geographic
markets.
[9] We conclude that the proposed transaction is unlikely to lead to any substantial
prevention or lessening of competition in any relevant market due to the low
market shares and the existence of other competitors in the relevant markets.
Public interest
Employment
[10] The merging parties submitted that there will be no negative effect on
employment as a result of the proposed transaction. 1 The employee
representatives for Nedbank and Emling Properties did not raise any concerns
with the proposed transaction.
[11] The Commission found that Emling Properties will continue to be an independent
entity and will not be integrated into Nedbank, as such, the proposed transaction
is unlikely to lead to duplications and subsequent retrenchments.
Spread of ownership
[12] The Nedbank Group has 40.07% black ownership which includes 17.75% black
female ownership whereas pre-merger Emling Properties is not owned or
controlled by any historically disadvantaged persons. The merging parties submit
that post-merger, Nedbank will hold 30% of the shares in Emling Properties and
as such the overall Black Economic Empowerment shareholding in Emling
Properties will be 12%.2
[13] The proposed transaction raises no other public interest concerns.
1 See Merger record inter alia pages 8-9.
2 (40.07% x 30%).
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Conclusion
[14] We conclude that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market. Furthermore, the proposed
transaction does not raise any public interest concerns.
30 March 2023
Mr Andreas Wessels Date
Ms Andiswa Ndoni and Dr Thando Vilakazi concurring
Tribunal Case Managers: Juliana Munyembate and Theodora Michaletos
For the Merging Parties: Vani Chetty of Vani Chetty Attorneys
For the Commission: Nolubabalo Myoli and Grashum Mutizwa