Bidding war for Fountainhead begins

Posted On Wednesday, 24 October 2012 08:03 Published by eProp Commercial Property News
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Growpoint, the JSE's biggest property company with a market capitalisation of about R44bn, on Tuesday started a bidding war against Redefine, the JSE's second biggest weighing in at about R29bn, for Fountainhead Property Trust's R10.3bn portfolio.

Norbert SasseGrowthpoint on Tuesday offered Fountainhead unitholders 35 Growthpoint units for every 100 Fountainhead units held, trumping an existing offer of three Hyprop units and 62.5 Redefine units for every 100 Fountainhead units held.

Growthpoint’s offer translates into about R8.63 per Fountainhead unit, beating Redefine’s offer, which translates into about R8.14 at Tuesday’s closing prices.

Fountainhead gained 1.9% to close at R8.10 on Tuesday.

Growthpoint CEO Norbert Sasse said in an interview on Tuesday that while this was essentially a counter offer, it was no different from any other opportunity to acquire an "attractive portfolio".

The assets were on the market and "in play", Mr Sasse said, adding that over the past few years, Growthpoint had been looking for quality retail assets, which were scarce and opportunities such as these were not often available.

Fountainhead had a high-quality portfolio that was predominantly retail focused, and Growthpoint had been looking for a portfolio such as this one, he said.

Fountainhead’s portfolio includes Centurion Mall, Westgate Shopping Centre, Kenilworth Centre, N1 City Mall and Bryanston Shopping Centre.

Growthpoint said in a statement on Tuesday the portfolio would complement its own existing retail portfolio, and would provide it with an opportunity to increase its geographic diversification.

Redefine CEO Marc Wainer said in an interview on Tuesday that while he had known beforehand that an offer would be made, he had not yet seen the offer.

Mr Wainer said the management company that Redefine had acquired from Fountainhead earlier in the year had not been approached, and Growthpoint’s offer did not include compensation for the management company.

An offer would need to be made for the management company, he said.

In August, Redefine started negotiations to acquire Fountainhead’s properties after buying Fountainhead’s management company from Standard Bank Properties and Liberty Holdings for R660m.

Redefine and Fountainhead have held formal discussions regarding a possible acquisition, although Fountainhead said late last month it would not recommend the offer to unitholders yet, as Redefine’s proposal was only indicative, and some issues needed clarification.

Property analysts have criticised Redefine’s planned acquisition of Fountainhead’s portfolio, suggesting that Fountainhead’s unitholders might be short-changed. However, Redefine said it would be "a good and fair deal" for both companies.

Last modified on Friday, 18 April 2014 19:08

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