Growthpoint offers to buy all linked units in Paramount

Posted On Monday, 23 October 2006 02:00 Published by eProp Commercial Property News
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IN A deal that values Paramount Property Fund at about R1,5bn, Growthpoint Properties, the largest listed property company on the JSE, has made a mandatory offer to acquire all the linked units in Paramount.

Norbert SasseThe bid, if successful, would boost Growthpoint’s market capitalisation and assets to about R11,5bn and R18bn, respectively. Growthpoint currently has a market capitalisation of about R10,7bn and property assets worth about R15bn.

The proposed takeover is part of a growing trend of consolidation in the listed property sector where larger listed property companies are looking to absorb the smaller funds and companies. In a separate deal, large listed property company Redefine Income Fund is in the process of a friendly takeover of Spearhead Property Holdings.

Growthpoint CEO Norbert Sasse said Growthpoint’s bid for Paramount was not hostile. The proposed transaction had been discussed with Paramount’s board of directors. “Certain of the Paramount directors have agreed to accepting the Growthpoint unit offer in respect of the units that they own (in Paramount),” said Sasse.

Paramount had “very nice Cape Town properties” and since the general sell-off of listed property units from May this year, the listed property sector was offering “much better value than direct property”, he said. Paramount’s portfolio was “solid” and contained good development and redevelopment opportunities.

Sasse said just under 50% of Paramount’s property exposure by value was in Cape Town. This would increase Growthpoint’s total exposure to Cape Town property from 15% to 20%.

He said Growthpoint had already bought up to 41,9% of Paramount’s units by Friday over a period of a couple of months. “In terms of the Securities Regulation Panel code, once you go over 35% you have to make a mandatory offer to all the other Paramount unitholders on terms no worse than what you paid for the 41,9% during that period,” said Sasse.

Growthpoint had paid cash for a portion of the Paramount units it had already acquired. It had also exchanged Growthpoint units for Paramount units. In terms of the offer for the remaining 58,1% interest in Paramount that Growthpoint does not already own, Growthpoint will be offering existing Paramount unitholders one new Growthpoint unit for every 1,44 Paramount units they own.

“If you look at the volume rated price of Growthpoint as of Thursday and the volume weighted price of Paramount as of Thursday, it (the offer) represents a premium of over 10%,” said Sasse. On a volume weighted unit price basis, Growthpoint’s price was R11,44 on Thursday, while Paramount’s price was R7,22. Growthpoint is also offering a cash alternative of R6,71 for every Paramount unit held.

Paramount unit-holders can accept either the unit offer or the cash offer.

Paramount MD Rodney Squire-Howe said Growthpoint had acquired units from Paramount’s unit-holders and had approached the company to say it would be making a mandatory offer to other unit-holders.



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