Fountainhead bidding war looms as Growthpoint cuts in on takeover

Norbert Sasse, CEO of Growthpoint Properties Limited.

Fountainhead Property Trust's R10.3 billion portfolio could be the subject of a bidding war after Growthpoint Properties said it may consider increasing its R10.4 billion offer to acquire the property assets.

Sector heavyweight and South Africa’s second-largest property group, Redefine Properties planned takeover of Fountainhead Property Trust's R10.3 billion portfolio is by no means a done deal.

Growthpoint Properties, South Africa’s largest JSE listed property company, on January 17 said that it may consider increasing its R10.4 billion offer for Fountainhead Property Trust (FPT) after the target company entered exclusive talks with a rival South African bidder.

Growthpoint made an all-share approach for Fountainhead in October in what Chief Executive Officer Norbert Sasse said would be the country’s largest ever property acquisition.

In December, Redefine announced it had raised its offer for Fountainhead Property Trust to 4.5 Hyprop units and 56 Redefine units for every 100 Fountainhead units, equating to R8.70. Fountainhead said last month that after examining both offers it would pursue a deal with Redefine.

A higher offer “could happen,” Sasse said in an interview at the company’s offices yesterday. “It’s not something that we are contemplating right now.” A hostile bid is not “off the table” either, he added. “We are not walking away from Fountainhead.”

Fountainhead rose 1 percent to 8.5 rand a share at the close in Johannesburg, it’s highest level since Jan. 7. About 9.4 million shares were traded, almost five times the three- month daily average. Redefine advanced 1.7 percent to 9.66 rand, the highest since Dec. 20. Growthpoint declined less than 0.1 percent to 25.98 rand.

The acquisition of Johannesburg-based Fountainhead would increase Growthpoint’s exposure to the retail sector, where it is “underweight,” Sasse said. Fountainhead owns or has stakes in several shopping malls in South Africa. The retail and industrial sectors will “remain fairly solid” in 2013 compared with the office market, Sasse added.