ACCC clears Federation-Novion merger

The Australian Competition and Consumer Commission said it was giving the green light to the $22 billion merger between Federation Centres and fellow property giant Novion, after the groups agreed to divest a south east Melbourne shopping centre.

The ACCC today said it would not block a merger between Federation Centres and Novion Property Group, after the two groups entered a merger agreement in February that would create a combined real estate investment trust, on the basis that the duo would divest a shopping centre in the Frankston region.

Without the divestment, the merger would substantially lessen competition in the region where Federation owns the Karingal Hub and Novion has its Bayside shopping centre -- the only large multipurpose shopping centre managers in the region, according to the consumer watchdog.

"The ACCC was also concerned about a potential reduction in competition for retail tenants," ACCC Commissioner Jill Walker said.

"This reduction in competition could have resulted in less attractive amenities and retail offerings, or an ability to charge higher rents." .

After accepting court-enforceable undertakings from the parties to divest one of the centres, the ACCC gave the merger the go-ahead.

"The proposed acquisition does not raise competition concerns in most regions where Federation Centres and Novion currently compete as there are sufficient alternative shopping centre managers in these regions," the ACCC said.

The merged entity will own or co-own 91 shopping centres across the country, making it the second largest owner of shopping centres in Australia. 

Implementation of the merger is expected to occur on June 11, with the timeline for divestiture of either of the Frankston centres remaining confidential.

The combined group will also be the second-largest listed manager of Australian retail assets and one of the 30 largest groups on the ASX.