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Vusani Investments (Pty) Ltd and Immovable Properties (owned by Sanlam Life Insurance Ltd) (123/LM/Dec 05) [2006] ZACT 31 (7 April 2006)

.RTF of original document

COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA



                                                               Case No: 123/LM/Dec 05



In the large merger between:

Vusani Investments (Pty) Ltd

and                                

Immovable Properties owned by Sanlam Life Insurance Ltd



Reasons for Decision
________________________________________________________________

Approval

1.      
On 22 March 2006 the Competition Tribunal issued a merger clearance certificate approving the merger between Vusani Property Investmens (Pty) Ltd and certain immovable properties owned by one or other of Sanlam Life Insurance Limited, Tralee Court (Pty) Ltd, and Brukkaros Investment (Pty) Ltd. The reasons appear below.

The Parties

2.      
The acquiring firm is Vusani Property Investments (Pty) Ltd (”Vusani Investments”), a newly formed company that does not control any firm and has never traded before. Vusani Investments is owned by Vusani Holdings (Pty) Ltd (“Vusani Holdings”), a shelf company. Vusani Holdings is owned by a number of shareholders in the following percentages:

•         Vusani Properties (Pty) Ltd (61.4%)
•        Mervyn Serebro Discretionary Trust (17.4%)
•         Elad Discretionary Trust (17.4%)
•         Mtupo Properties (Pty) Ltd (3.8%)

Some of these shareholders are subsidiaries and are controlled by other shareholders, the details of which are not significant for the purposes of this decision.


3.      
The primary target is a number of immovable properties owned by one or other of Sanlam Life Insurance Limited (“Sanlam”), Tralee Court (Pty) Ltd (“Tralee”) and Brukkaros Investment (Pty) Ltd (“Brukkaros”). Tralee and Brukkaros are wholly owned subsidiaries of Sanlam. Sanlam is a wholly owned subsidiary of the Sanlam Group Limited, which has got many other subsidiaries not relevant for the purposes of this decision.


The Merger Transaction

4.      
Vusani Investment is acquiring from Sanlam, Tralee and Brukkaros certain immovable properties comprising retail, office, and industrial properties and showrooms. Post merger Vusani Holdings will hold 100% of the ordinary share capital in Vusani Investments. This will give Vusani Holdings 70% voting rights in that company. Sanlam will acquire 21 924-preference shares in Vusani Investment, which will give it 30% of the voting rights.

5.      
Sanlam will provide finance to Vusani investments to purchase the said properties, subject to the debenture subscription agreement entered into between Vusani Investments and Sanlam.


.
Rationale for the Transaction

6.      
The parties have stated that because of the transformation process taking place in the property industry, Sanlam wants appropriate BEE ownership and management of the specified immovable properties. Vusani, which is a BEE company, wishes to participate in the property market and views this as an opportunity to do so.


The relevant markets

7.      
The relevant market can be categorised depending on the uses of the property and this includes, retail, office, and industrial properties and showrooms.
8.      
As can be seen from the table below, the geographic market is spread over seven provinces in South Africa and there are two properties located in Namibia. Thus the market is not concentrated.


PROPERTY

        

ESTIMATED MARKET SHARE

REGION

TYPE
Bisho Indwe House
5%
Eastern Cape
Office
Rosettenville Shopping Centre
5%
Gauteng
Retail
Santrio Shopping Centre, Vanderbijlpark
5%
Free State
Retail
158 Jan Smuts & Auto Bavaria
1%
Gauteng
Office and Showrooms
Sanlam Building, Bloemfontein
5%
Free State
Office
81 Rissik Street, Johannesburg
1%
Gauteng
Office
Atrium Terrace, Randburg
1%
Gauteng
Office
West Gate Shopping Centre, Cape Town
5%
Western Cape
Retail
Sanlam Forum, Witbank
5%
Mpumalanga
Office
Odendaalsrus Shopping Centre
5%
Free State
Retail
Eersterus Plaza, Pretoria
1%
Gauteng
Retail
Market Square, King Williams Town
5%
Eastern Cape
Retail
Metcash, Wynberg
5%
Western Cape
Retail
Metcash, Vryheid
5%
Free State
Retail
SARS, Durban
5%
Kwazulu Natal
Office
Damelin College, Braamfontein
5%
Gauteng
Office
Metcash, George
5%
Eastern Cape
Industrial
Metcash, Ermelo
5%
Mpumalanga
Industrial
Metcash, Kimberly
2%
Northern Cape
Industrial
Metcash, Tsumeb
2%
Namibia