Tribunal approves AFHCO's acquisition of Morulat

The Competition Tribunal has unconditionally approved the large merger involving the acquisition by AFHCO Holdings (Pty) Ltd (AFHCO) of Morulat Property Investments 4 (Pty) Ltd (Morulat). AFHCO is a property investment company and is a wholly owned subsidiary of SA Corporate Real Estate Fund (SA Corporate), a diversified real estate investment fund listed on the Johannesburg Securities Exchange. AFHCO's property portfolio is focused in the Johannesburg inner city. Morulat is also a property investment company, which owns five mixed use properties located in the Johannesburg inner city.

The proposed transaction follows on from a previous transaction that the Tribunal unconditionally approved, in terms of which SA Corporate acquired all of the issued shares of AFHCO. Morulat was a subsidiary of AFHCO prior to the original transaction but was excluded from that transaction.

The Competition Commission, following its investigation, found that the proposed transaction gives rise to a horizontal overlap in the market for the provision of residential properties and retail space as the merger parties both own residential properties with retail space in and around the Johannesburg inner city. Nevertheless, due to the large number of competitors which will continue to constrain the merged entity and the small market share of the merged entity, the Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in the identified markets. Furthermore, the Commission found that the merger results in no public interest concerns. The Tribunal agreed with the Commission's findings and approved the transaction without conditions.