Public Investment Corporation Limited
Acquiring Firm
And
CBS Property Portfolio Limited
Target Firm
Panel
:
D Lewis (Presiding
Member), Y Carrim (Tribunal Member)
and M Mokuena (Tribunal Member),
Heard on
:
18 July 2007
Order Issued
:
18 July 2007
Reasons Issued:
13 September 2007
Reasons for Decision
Approval
[1]
On 18 July 2007, the Tribunal unconditionally approved the merger between the Public Investment Corporation Limited and CBS Property
Portfolio Limited. The reasons for approving the transaction follow.
The parties
[2]
The primary acquiring firm is the Public Investment Corporation Limited (“PIC”), acting in its capacity as agent to the
Government Employees Pension Fund. PIC is not controlled by any firm, and is an investment management company wholly owned by the
South African Government.
[3]
PIC controls various firms. For the purposes of this transaction the following firms controlled by PIC are relevant:
[3.1]
ADRIASA (Pty) Ltd;
[3.2]
Black Ginger 33 (Pty) Ltd;
[3.3]
Van Noppen Properties (Pty) Ltd;
[3.4]
1/1350 Zwartkop Centurion (Pty) Ltd;
[3.5]
Erf 3342 Phalaborwa (Pty) Ltd; and
[3.6]
Pareto Limited (40%), which is jointly controlled with ESKOM Pension and Provident Fund.
[4]
The primary target firm is CBS Property Portfolio Limited (“CBS”), a company incorporated under the company laws of the
Republic of South Africa. CBS is a public company listed on the JSE Securities Exchange and is not controlled by any single firm.
CBS controls various firms.
Description of the transaction
[5]
PIC is acquiring all of the units linked in issue in CBS, other than those it already holds. The proposed transaction will result in PIC acquiring control of all the properties in the CBS property portfolio.
Rationale for the transaction
[6]
The PIC intends to increase the property portfolio under its management to account for 5-8% of the total assets under PIC’s
management.
The parties’ activities
[7]
PIC is an investment management company that invests in various asset classes, including properties. PIC’s property portfolio
consists of office properties, retail properties, industrial properties, residential properties, specialised use properties and vacant
land.
[8]
CBS is a variable rate property loan stock company. It is listed on the Financial Services: Real Estate Holding and Development sector
of the JSE Securities Exchange. CBS derives its income from rentals paid by tenants occupying its properties. CBS’s property
portfolio consists of office properties, rental properties, industrial properties, residential properties, hotel properties and property
used for educational purposes.
Competition analysis
[9]
The Commission submitted that there is no overlap in the activities of the parties with regards to light industrial property, and
retail property markets. There is a slight overlap in the activities of the parties in the office property market. In that regard,
the Commission submitted that merging firms have a combined post merger market share for grade P office space in Sandton node of
2.6%, for grade A office properties in the Sandton node, 11% for grade B office property in the Midrand node and 3.6% for light industrial
property in the Midrand node. These market shares are small and do not raise competition concerns. As a result, the proposed transaction
is unlikely to substantially prevent or lessen competition.
Public Interest
[10]
There are no public interest issues.
Conclusion
[11]
The merger is approved unconditionally.
________________
13 September 2007
D Lewis
DATE
Tribunal Member
Y Carrim and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher
:
R Kariga
For the merging parties:
M Van Hoven, Jowell Glyn and Marais Attorneys For the Commission
:
M Dasrath and M Mohlala (Mergers
and Acquisitions)
SAFLII:
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