Unlisted fund Community Property Company (Comprop) has made R1.8 billion “all cash clean offer” for JSE-listed small cap Safari Investments.
Comprop, which is part of the Futuregrowth Asset Management stable, and has a R4.4 billion portfolio targeting rural and township retail, says the offer has majority support from Safari’s main shareholders.
The offer effectively thwarts a reverse takeover bid of Safari by Fairvest Property Holdings, which has been in “friendly merger” talks with Safari since March.
Safari is listed as a real estate investment trust (Reit) on the JSE and holds retail developments in underdeveloped areas in its portfolio.
Comprop says Safari shareholders holding or representing approximately 55.7% of Safari’s issued shares have irrevocably taken an undertaking to vote: (i) against the Safari shareholder resolutions required to implement the Fairvest reverse takeover offer; and (ii) in favour of the scheme to implement the Comprop offer.
The fund added that the deal would see it acquiring the entire issued share capital of Safari for a cash price of R5.90 per share. Safari would then become a wholly-owned subsidiary of Comprop and would delist from the JSE.
Comprop notes that its offer is at a 38.8% premium to the R4.25 “clean price per Safari share” as at July 19 and a 28.8% premium to the R4.58 average price per Safari share based on a 30-day weighted volume to July 19. It added that its offer was at a 42.2% premium to the R4.15 per share effectively being offered by Fairvest based on its swap ratio of 2.22 Fairvest shares for each Safari share.
The fund said it believes that its offer will provide Safari shareholders with an opportunity “to realise significant value for their shares, at a level in excess of what they are likely to otherwise attain in the short to medium-term by remaining listed, even if the Fairvest reverse takeover offer were to be implemented”.
Comprop director Smital Rambhai tells Moneyweb that the fund has been “looking at Safari for over 18 months” and fits in line with Comprop’s strategy to invest in rural and township retail.
“We have already put a firm proposal to Safari and have secured the irrevocable support of its top five shareholders, representing more than 55%… This effectively means that the Fairvest offer has been blocked,” he adds.
Rambhai says the existing portfolio includes township retail assets such as Bridge City Shopping Centre in KwaMashu (Durban) and Eyethu Orange Farm Mall in Johannesburg. He says Comprop has been operating in the rural and township shopping centre space for some 20 years.
Fairvest CEO Darren Wilder did not respond to calls from Moneyweb on Monday. The Cape Town-based listed property fund also operates in the rural and township retail space and is one of the sector’s top performers in terms of dividend growth.
Wilder said in a previous interview with Moneyweb that “Safari is a good fit for Fairvest” with both funds operating in the “better performing and more resilient” lower LSM retail property market. He was hoping to create a R6 billion fund with the Safari/Fairvest tie up.