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Growthpoint’s R2.9bn UK shopping spree approved

Capital & Regional shareholders agree to takeover deal by SA’s largest property company.

In one of the biggest merger and acquisition deals likely to be signed by a South African real estate investment trust (Reit) this year, JSE-listed Top 40 index group Growthpoint Properties has received approval from Capital & Regional shareholders to a R2.9 billion takeover deal of the UK-based fund.

Capital & Regional, a comparatively small shopping centre-focused property counter that has been struggling in the face of Brexit uncertainty, announced on its website on Tuesday that shareholders have given the deal the go-ahead.

Read: Growthpoint to bid for Capital & Regional despite Brexit risks

This followed Capital & Regional posting notifications on the London Stock Exchange and JSE, also on Tuesday, related to its general meeting, where Growthpoint’s offer was tabled and voted on.

According to the announcement on its website, more than 97% of Capital & Regional’s shareholders voted in favour of Growthpoint’s offer.

Hugh Scott-Barrett, chairman of Capital & Regional said in the statement: “It is very pleasing to see such strong shareholder support for the proposed transaction, endorsing the board’s view that this will provide a transformational catalyst for the future growth of Capital & Regional.”

Read: Capital flight: SA property companies invest billions more offshore

The two groups first announced that takeover talks were underway in August, which was followed by an official offer from Growthpoint in October. Growthpoint’s bid, made up of a partial cash offer to existing shareholders and a subscription of new shares in Capital & Regional, effectively values the deal at £150 million (around R2.9 billion). The deal will see Growthpoint securing a more than 51% controlling stake in Capital & Regional.

In October, Growthpoint offered existing Capital & Regional shareholders 33 UK pence in cash per share, which represented a 100% premium to the UK counter’s share price on September 10. The proposed offer also included a subscription to acquire new shares in the group as part of a capital raise for Capital & Regional.

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Why would a South African Company pay a 100% premium to buy a struggling UK Company? Vastly overpaying, no wonder share holders voted in favour.

Punt on Brexit outcome being better than expected, no local growth and as per all things investment banking, you often do the deals that are available and justify later, rather than the right deals.

So no fear at all of the White Haired Clown in Downing Street either … wow!

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