REDEFINE Properties’s takeover of Fountainhead is back on the table after a change of heart on the part of the target’s largest investor.
Last August, the Redefine bid to buy the company failed as it did not win enough support.
On Friday, however, Redefine, which controls R51.1-billion in properties, including the East Rand and Maponya malls in Johannesburg, said it had finally secured irrevocable support for the deal to go ahead. With the proposed deal Redefine is to buy the remaining 34.1% of Fountainhead that it does not own in exchange for 85 new Redefine shares for every 100 Fountainhead units. This is higher than last year’s offer of 82 shares for every 100 Fountainhead units.
Andrew Konig, Redefine CEO, said on Friday that the majority Fountainhead unitholder had been holding out for a better price — “way above†what Redefine thought was fair and reasonable for Fountainhead — but relented when the situation turned to stalemate.
“It’s been a long time coming,†he said.
Konig said Redefine would be able to remove layers of management, save on administrative costs and eliminate duplicated effort.
The deal would change Redefine’s property mix.
“It improves the overall portfolio of Redefine in that we move towards a retail bias, away from our traditional office bias,†said Konig.
“Retail assets are far more defensive. For us, it completes a process we began more than two years ago.â€
Redefine would get an enviable R12.2-billion portfolio from Fountainhead, including Centurion mall, Benmore Gardens, Bryanston shopping centre and the majority of N1 City.
Fountainhead’s major unitholders — who have already said they will vote in favour of the deal — include Catalyst Fund, Old Mutual, Absa Asset Management, the Eskom Pension and Provident Fund, and Nedbank Capital, which together represent 34.1% of the outstanding votes.
Redefine had nonbinding indications from another 14.3%.
Konig said this would simplify corporate structure and give better visibility to earnings and “how we conduct our businessâ€.
“The difference is this time we have secure, upfront institutional support, which in our view is sufficient to make the deal happen.â€
