Fountainhead assesses offers lodged by Redefine and Growthpoint
On Tuesday, Growthpoint outplayed Redefine’s bid by offering 35 of its units for every 100 Fountainhead units held, and this has prompt Fountainhead Property Trust to appoint an independent committee to evaluate the bids lodged by the listed property giants for its R10.3 billion portfolio.
Expectation of a bidding war sent Fountainhead’s share up 4% to R8.43 on Wednesday. Analysts commented that the tussle between Growthpoint and Redefine for Fountainhead’s portfolio of shopping centres would steer the Financial Services Board and the industry into "unchartered territories".
Redefine on Wednesday responded to Growthpoint’s counterbid by saying its offer for Fountainhead Property Trust remains on the table, unchanged.
Redefine, which bought Fountainhead’s managing company from Standard Bank Properties and Liberty Holdings for R660m, submitted an indicative offer of 62.5 Redefine units and three units in listed retail property company Hyprop for every 100 Fountainhead units held, which will allow Redefine to exit from its existing 30 percent shareholding in Hyprop in September 2012.
In October 23 2012 Growthpoint, the JSE’s largest property company with a market capitalisation of R44 billion, also put in an offer considered to be substantially superior to that of Redefine. Growthpoint’s offer translates into about R8.63 a Fountainhead unit and Redefine’s offer works out to about R8.14 a Fountainhead unit.
Alex Phakathi, Fountainhead Chief Executive Officer told SA Commercial Prop News that, “Growthpoint’s offer came in on Tuesday afternoon. The board has indicated that it has appointed an independent committee to look at this and advise the board. Only then can an assessment take place.”
Fountainhead said that there were a number of regulatory and commercial issues that had to be finalised before Fountainhead’s management company could revert to unitholders about the relative merits of the two unsolicited bids received for its assets.
Grindrod Asset Management’s chief investment officer, Ian Anderson, said Growthpoint’s proposal would have to be referred to the Financial Services Board, which would have to determine what it thought was a fair outcome, given that acquisitions usually covered both the management company and the fund.
"It would be interesting to see whether or not the Financial Services Board would like to set a precedent that would allow the acquisitions of funds which bypassed management companies," he said.
Should Growthpoint’s offer be allowed to go through, the Financial Services Board may well insist on some form of compensation for Redefine’s acquisition of the management company in order to discourage this type of transaction in the future, he said.
Catalyst Fund Managers MD Andre Stadler said Catalyst had always been unhappy with Redefine’s offer, and while Growthpoint’s offer was a "step in the right direction", Fountainhead’s portfolio was worth more.
Growthpoint chief executive Norbert Sasse said it was looking to buy a portfolio of properties at reasonable value in the overall interest of Growthpoint and its unitholders and at a price that was accretive. Redefine chief executive Marc Wainer said that Growthpoint’s offer was not better than that of Redefine.
Redefine stock dropped 3.86 percent to R9.22 yesterday. Growthpoint added 0.41 percent to R24.75.