Growthpoint bid to buy Fountainhead properties against Redefine

Norbert Sasse, CEO of Growthpoint Properties

Growthpoint Properties, SA's largest property investment company offered to buy rival Fountainhead Properties on Tuesday, in a cash and share deal that values the company at more than R10 billion.

Growthpoint offered 35 shares for every 100 held by Fountainhead shareholders, trumping an existing offer of three Hyprop units and 62.5 Redefine units for every 100 Fountainhead units held. Growthpoint would also pay off Fountainhead's existing debt.

Growthpoint’s offer translates into about R8.63 per Fountainhead unit, beating Redefine’s offer, which translates into about R8.14 at Tuesday’s closing prices.

In August Fountainhead held formal talks with Redefine Properties the second largest listed property loan stock company in SA, and confirmed this month it had received an indicative proposal from Redefine to acquire most of its assets, after Redefine bought the Fountainhead management firm for R660 million from Standard Bank Properties (Pty) Limited and Liberty Holdings Limited.

Market commentators say Redefine's proposed price may be too low to garner enough support for the deal. But Marc Wainer, CEO of Redefine, said the offer is reasonable given how many variables had to be considered.

Fountainhead gained 1.9% to close at R8.10 on Tuesday.

Growthpoint CEO Norbert Sasse said in an interview on Tuesday that while this was essentially a counter offer, it was no different from any other opportunity to acquire an "attractive portfolio".

Fountainhead had a high-quality portfolio that was predominantly retail focused, and Growthpoint had been looking for a portfolio such as this one, he said.

Fountainhead’s portfolio includes Centurion Mall, Westgate Shopping Centre, Kenilworth Centre, N1 City Mall and Bryanston Shopping Centre.

The deal, if concluded, would create the 26th largest company on the South African bourse with a market value of more than R54 million.