Emira may get more offers as Arrowhead is spurned

Emira Property Fund, which could be taken over by Arrowhead Properties, may receive offers from other suitors.

Arrowhead, a diversified fund that has been growing mostly through acquisitions since it listed five years ago, last Monday said it was interested in acquiring Emira’s shares by way of a swap scheme.

But Emira CEO Geoff Jennett and the company’s board said on Thursday Arrowhead was being opportunistic and a potential offer held no benefits for Emira’s shareholders.

Emira’s share price is down about 7.67% in 2016 to date. This is partly because the company warned its dividends were expected to fall in the year to June 2017.

Market commentators say a low share price has made it a takeover target.

Maurice Shapiro, head of Ma’alot Investments, said it made sense that Arrowhead would try to acquire a company with a weakened share price.

“Arrowhead has been growing through acquisitions for years. They will look for opportunities, especially when they feel companies’ prices look attractive. Other companies may also see an opportunity and make an offer which Emira’s shareholders prefer to Arrowhead’s,” he said.

Arrowhead said it had garnered the support of groups that had about 22% of Emira’s shares under ownership.

One of these may be Redefine, which owns about 11.47% of Emira’s stock, according to Emira’s 2015 annual report. Jennett said Arrowhead would bring weaker assets to Emira’s portfolio should a merger or takeover occur.

There is market speculation that SA Corporate Real Estate Fund may be a possible suitor as it looks to strengthen its office portfolio. SA Corporate has a market capitalisation of about R12.4bn, making it larger than Emira, which has a market cap of R7.4bn and may be attracted to Emira’s offices and development pipeline.