Listed property loan stock company Acucap Properties yesterday unveiled a takeover bid for Atlas Properties in a deal valued at about R820m.

Acucap, which already owns 34,99% of the total issued linked units in Atlas, said it would make a bid to acquire the remaining 65% it did not already own.

The proposed transaction would see Acucap’s market capitalisation increase from about R3,3bn to about R4,2bn and its property assets grow from about R3,1bn to R4,1bn.

Acucap MD Paul Theodosiou said the deal would push Acucap up the listed property rankings in terms of size.

He said the transaction made sense as the companies’ portfolios were similar from a “sectoral spread point of view” as they both had a bias towards retail property.

“They are (also) geographically complimentary in that Atlas has a strong Cape weighting and Acucap has more of a bias towards Gauteng.

“It (the transaction) will bring more geographical balance.”

The takeover was “friendly” and had the support of the board and management of Atlas.

In terms of the offer, Atlas unitholders will be given the option of swapping their Atlas units for Acucap units. They can also elect to receive up to 40% of the total offer consideration in cash.

Atlas unitholders are being offered 0,635 Acucap units for every one Atlas unit they own.

Theodosiou said the Acucap offer represented a premium of about 10% on the Atlas spot price and about 6% on the 30-day average price.

Atlas CEO Ian Raubenheimer said the merger would give investors “liquidity in the share trading”. He said there was a “big trend” towards consolidation in the listed property sector in favour of bigger companies because they were more attractive to overseas investors.

“Bigger companies (also) have more financial muscle to buy bigger properties.”

Raubenheimer said Atlas’s management would be absorbed into Acucap.

Leon Allison, property analyst at Macquarie First South, said the proposed deal was a continuation of the trend of consolidation in the South African listed property sector.

Consolidation in the listed property sector was necessary because there were too many entities in the sector, given its size. “It would be preferable to have fewer but larger and more liquid stocks or companies in the sector,” Allison said.

He said the deal was “positive” for unitholders of both Acucap and Atlas.

Acucap acquired its initial 33% stake in Atlas near the end of last year. The interest, which was acquired for R331,9m, was Acucap’s first major stake in another listed property company.

At the time there was speculation that this was the first step in a takeover bid for Atlas by Acucap. Most analysts said at the time that the initial transaction could result in some corporate action at a later date.

Since then Acucap has acquired more Atlas linked units on the open market and increased its interest to 34,99%.

This was just below the 35% threshold that triggers a compulsory offer to all unit holders in terms of the Securities Regulation Panel code.