Sa­fari in­vestors sink Fair­vest of­fer

Re­jec­tion helps clear the way for po­ten­tial bids from other suit­ors

Business Day - - FRONT PAGE - Alistair An­der­son Prop­erty Writer an­der­[email protected]­nesslive.co.za

Sa­fari In­vest­ments and fel­low low-in­come retail cen­tre owner Fair­vest have shelved plans to merge fol­low­ing a back­lash from Sa­fari share­hold­ers, who said the deal un­der­val­ues their com­pany. This sent Sa­fari’s shares 9.05% higher to R5.30 on Wed­nes­day, its big­gest jump in three-and-a-half weeks.

Sa­fari In­vest­ments and fel­low low-in­come retail cen­tre owner Fair­vest have shelved plans to merge fol­low­ing a back­lash from Sa­fari share­hold­ers, who said the deal un­der­val­ues their com­pany. This sent Sa­fari’s shares 9.05% higher to R5.30 on Wed­nes­day, its big­gest jump in three-and-a-half weeks.

The re­jec­tion of Sa­fari ’ s of­fer for Fair­vest helps clear the way for po­ten­tial ri­val bids from un­listed group Com­prop and other suit­ors.

The two com­pa­nies had been in merger talks since March when a share swap deal was pro­posed, but Com­prop, an un­listed group, made a more at­trac­tive cash of­fer in July to buy Sa­fari out­right for R1.8bn.

Cape Town-based Fair­vest, which owns malls in small towns and semi-ur­ban ar­eas, wanted to merge with Sa­fari, the owner of shop­ping cen­tres in lower-in­come ar­eas mostly lo­cated in Tsh­wane, be­cause of strong po­ten­tial syn­er­gies and cost sav­ings that could re­sult from a merger.

Sa­fari also owns a shop­ping cen­tre, Platz Am Meer, in Swakopmund, Namibia.

In terms of the deal, Sa­fari would have ac­quired all of Fair­vest by way of a friendly merger with a swap ra­tio of 0.45 shares for each Fair­vest share.

Sa­fari’s ex­ec­u­tive man­age­ment and its list­ing would have been re­tained. The deal valued each Sa­fari share at R4.30.

How­ever, Com­prop’s of­fer, which would lead to the delisting of Sa­fari, valued each share at R5.90. Com­prop has not said if it would re­tain Sa­fari ’ s man­age­ment.

Chris Lo­gan, chief in­vest­ment of­fi­cer at Op­por­tune In­vest­ments, said on Wed­nes­day that Com­prop’s of­fer is stronger and bet­ter for share­hold­ers.

Lo­gan ques­tioned Sa­fari’s di­rec­tors last week at their an­nual gen­eral meet­ing about why they were still en­ter­tain­ing Fair­vest’s weaker of­fer.

Al­bie Cilliers, head of Ci­lan­dia Capital, wanted to un­der­stand how the Sa­fari board viewed the takeover of­fers.

But the di­rec­tors de­clined to com­ment on ei­ther Fair­vest or Com­prop’s of­fers and the meet­ing de­scended into ar­gu­ments.

Sa­fari said in a state­ment on Wed­nes­day that Com­prop had un­der­tak­ings from five Sa­fari share­hold­ers, who held 55.7% of the com­pany’s shares, that they would vote against all res­o­lu­tions re­quired to im­ple­ment the Fair­vest merger. They had also given un­der­tak­ings to vote in favour of the Com­prop deal.

Hopes that Fair­vest might make a counter-of­fer to Com­prop’s were also dashed on Wed­nes­day af­ter MD Dar­ren Wilder said the group could not com­pete with Com­prop, given its in­vest­ment cri­te­ria.

“The cash of­fer equates to a less than 8% eq­uity yield for the as­sets. An of­fer at this level would not be ben­e­fi­cial to Fair­vest share­hold­ers over the long term,” he said. “In tough eco­nomic times, it is crit­i­cal only to pur­sue trans­ac­tions that en­sure long-term value cre­ation.”

In­sti­tu­tional in­vestors in listed prop­erty coun­try­wide have called on prop­erty coun­ters to con­sol­i­date into larger, more liq­uid com­pa­nies.

Lo­gan said other com­pa­nies may still make plays for Sa­fari.

Zayd Su­laiman, a fund man­ager at Cat­a­lyst, said if Com­prop suc­ceeded in its bid, the listed sec­tor would have one fewer counter. “We would pre­fer a larger sec­tor with spe­cial­ist fo­cused com­pa­nies to in­vest in. Thus, rather than delist­ings, we would pre­fer con­sol­i­da­tion of com­pa­nies with sim­i­lar prop­erty port­fo­lios with spe­cial­ist man­age­ment,” he said.

The Com­prop of­fer nev­er­the­less ap­pears to be com­pelling and Sa­fari’s board “have a fidu­ciary duty to do what’s best” for its share­hold­ers, Su­laiman said.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.