Redefine acquires Fountainhead Property Trust after 3-year battle

AFTER a drawn-out, three-year process, the planned acquisition by Redefine Properties of the portfolio of listed Fountainhead Property Trust, in a transaction valued at almost R14 billion, has come to fruition.

This follows listed Redefine Properties receiving overwhelming approval from Fountainhead unit holders for the proposed transaction at a general meeting on Friday.

As a related party to the transaction, Redefine was precluded from voting its shares. Redefine already owns Fountainhead’s management company and has a 66 percent equity interest in Fountainhead.

In terms of the transaction approved by Fountainhead unit holders on Friday, Redefine is to acquire all of Fountainhead’s assets, including the entire Fountainhead property portfolio, in exchange for 85 new Redefine shares for every 100 Fountainhead units plus the assumption of Fountainhead’s liabilities.

Based on Redefine’s current share price, the transaction places a value of almost R14bn on Fountainhead’s property portfolio. The portfolio comprises 44 properties, of which 70 percent by value are prime retail assets.

Redefine in November failed at a general meeting to get the required 75 percent minimum support for the merger from other unit holders.

It revived the proposed merger in April and advised Fountainhead’s board that it had reached an agreement with five significant Fountainhead unit holders representing 35.7 percent of the votes capable of voting on the proposed trans- action, who had irrevocably undertaken to vote in favour of the acquisition.

Four of these irrevocable undertakings were obtained from Catalyst Fund, Old Mutual, Absa Asset Management and Nedbank Capital, all of which had voted against the proposed merger at the general meeting in November.

Redefine said at the time it had also obtained non-binding indications of support from a further 14.3 percent from those unit holders capable of voting.

Unit holders representing 99.75 percent of those eligible to vote on Friday voted in favour of the approval.

Trading in Fountainhead units is to be suspended from August 3 and the trust delisted from the JSE on August 11.

Andrew Konig, the chief executive of Redefine, said on Friday that they were thrilled with the outcome of the general meeting, which had completed a process they began more than three years ago.

Redefine was involved in a bitter battle in 2012 and 2013 with rival listed property company Growthpoint for the assets of Fountainhead. Shares in Redefine rose 0.36 percent on Friday to close at R11.29.