Safari shouldn’t be coy if it gets buyout offers
Safari Investments, the owner of malls in small towns and semi-urban areas, especially serving lowerincome consumers mostly in and around Tshwane, looks primed for a takeover after a number of failed bids from suitors last year. A weak economy and risk-off selling amid the Covid-19 pandemic have left Safari vulnerable.
The question now is whether Safari’s board will entertain any offers, given that its longerstanding members, some of them founders with relatedparty structures in place, have been resistant to change. In the interests of its shareholders, it really should.
One such takeover bid could come from Heriot Reit, a diversified, SA-focused property company that has recently been purchasing shares in Safari, signalling moves to buy the company out. The synergies between the two companies are apparent as both own similar assets and rent space to common tenants.
Last year, members of Safari’s board and management stifled at least two takeover attempts, one by Community Property (ComProp), and one by Dipula Income Fund. The board wanted to pursue a friendly merger with Fairvest Property Holdings, which offered less than ComProp, so that certain executives could retain their jobs — never mind how much shareholders could score. Safari has also used a number of related parties for developments and marketing in the past.
The Fairvest deal was called off after pressure from minority shareholders.
The debacle around Safari has persisted for months and a healthy takeover would be a victory for corporate governance and minority shareholders.
COMAIR
It has been a turbulent few months for Comair. The listed aviation company, which has a reputation for back-to-back profits, is suddenly putting out fires that are hurting its bottom line. Even before the outbreak of the coronavirus, the operator of the low-cost carrier kulula.com had a lot on its plate.
Covid-19 is the third financial setback for the company in about a year. First, Comair found itself swept up in the grounding of Boeing 737 Max 8s.
It has been costly for Comair because the company was the first African airline operator to order eight of the planes, for R9bn, as part of a fleet renewal and expansion strategy. As the Boeing saga plays out, Comair wants its money back or compensation as it has paid for aircraft it cannot use.
Furthermore, the longstanding settlement with SAA over the state-owned airline’s anti-competitive behaviour took a turn for the worse when SAA went into business rescue in late 2019. The dispute had been going on since Comair lodged the initial dispute with competition authorities in 2003.
In terms of a settlement agreement between the two, SAA was supposed to pay Comair a total of R1.1bn between the end of February 2019 and July 28 2022. That arrangement could well be under water now. Comair has vowed to go after the payment, but it could be a drawn-out process.
So the Covid-19 pandemic makes Comair’s burden even heavier. The company will suspend its flights between March 26 and April 19 after President Cyril Ramaphosa’s announcement of a three-week lockdown on Monday.