Fountainhead, Redefine deal ‘fair’
REDEFINE Properties, SA’s second-largest property firm, says its acquisition of Fountainhead Property Trust’s R11bn property portfolio “is a good and fair deal” for both firms.
REDEFINE Properties, SA’s secondlargest property firm, says its acquisition of Fountainhead Property Trust’s R11bn property portfolio “is a good and fair deal” for both firms.
This comes after Fountainhead Property said yesterday it would not recommend the offer to unitholders yet, as Redefine Properties’ proposal to acquire its assets was only indicative. There were issues that needed clarification. Fountainhead said an independent committee and its advisers would engage with, among others, unitholders, regulatory authorities and Redefine to ensure that the interests of the unitholders were appropriately considered and protected.
The independent committee has appointed an independent expert to advise it on the fairness of the Redefine proposal, the company said.
Redefine Properties CEO Marc Wainer said yesterday that to make a fully informed decision, Fountainhead unitholders would need the latest information on budgeted growth, if any, in Fountainhead’s distributions for the 2013 financial year. He said that once the information was provided, unitholders could confidently vote on Redefine’s offer.
A minimum 50%-plus-one vote by Fountainhead shareholders would clear the way for the deal and remove any uncertainty surrounding Fountainhead’s future, he said.
A large percentage of Fountainhead unitholders also hold Redefine units, which is potentially a powerful voting bloc. A “yes” vote means Fountainhead unitholders can sidestep the alternative, where Redefine remains manager of the Fountainhead management company, earning fee income.
If approved, the deal would also see Redefine exit its 30% shareholding in blue-chip retail-focused property firm Hyprop Investments.
To sweeten the deal, Redefine has plans to utilise the listed Fountainhead vehicle to launch a black economic empowerment (BEE) initiative, once the purchase has been concluded, to further the objectives of the Property Charter.
“Fountainhead unitholders will have the opportunity to share in this exciting BEE investment by holding their shares or if they choose, selling them,” Mr Wainer said.
He said three properties would remain in Fountainhead, to retain its JSE listing and investor base.
Fountainhead Property Trust unitholders would have the final say on the offer by Redefine.
At a 20% premium over the portfolio’s net asset value, Redefine’s share swap offer remains unchanged at three Hyprop units and 62.5 Redefine units for every 100 Fountainhead units.
The offer follows Redefine’s acquisition of Fountainhead’s management company for R660m earlier this year. Redefine’s offer excludes the purchase of Fountainhead’s net working capital, including distributable profits earned up to the effective date. After transaction costs, this net working capital will be available for distribution to Fountainhead investors.