Redefine Properties’ drawn-out battle to acquire Fountainhead Property Trust is nearing its end, with the two property funds yesterday jointly announcing a takeover agreement. The transaction will see Redefine acquire the third of the shares in Fountainhead it does not already own, and now only requires the approval of shareholders to be completed.
Redefine has spent nearly three years trying to acquire Fountainhead and its portfolio, which is valued at about R13bn and contains some key metropolitan shopping centres. During this process it acquired Fountainhead’s management company and about two thirds of the trust’s shares. Growthpoint Properties made a competing offer for Fountainhead’s assets, but its bid was not accepted.
“Fountainhead’s property portfolio is very attractive, even if part of it has been neglected over the past few years. “Last year we made an attempt to buy the shares of Fountainhead we did not already own. We came just short in terms of the shareholder approval needed, but this time we offered a more attractive swap ratio in our agreement,” said Redefine’s executive chairman, Marc Wainer.
In terms of the proposed transaction, Fountainhead unit holders would receive 85 Redefine consideration shares, subject to rounding, for every 100 Fountainhead units in issue on the record date, expected to be August 7, directly from Redefine.
Portfolio manager at Investec Asset Management Peter Clark said that Fountainhead’s shareholders were likely to vote in favour of the transaction. “Long term this is the right move for Redefine as it increases the quality of its portfolio and its exposure to retail. However, short term it may cause some dilution,” said Mr Clark.
