Redefine's withdrawal paves way for Growthpoint

Sector heavyweights, Marc Wainer CEO at Redefine and Norbert Sasse CEO at Growthpoint have been competing for control of Fountainhead since last year, which led Redefine to halt its proposal to acquire the property portfolio of Fountainhead Trust.

Redefine Properties withdrawal from the battle to acquire JSE-listed Fountainhead Property Trust’s portfolio paves way for Growthpoint to pursue takeover deal.

Redefine, SA's second largest property fund planned takeover for the R10.3 billion property portfolio after buying the trust’s management company for R660 million from Standard Bank Properties and Liberty Holdings in August last year, failing which it would continue to manage and administer Fountainhead through Fountainhead Manco.

The battle intensified when Growthpoint Properties, SA’s largest property fund launched a counterbid for Fountainhead assets higher than Redefine in October last year, proving subject of a bidding war.

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

The following day in response to the counterbid, Redefine confirmed its indicative offer to acquire the assets remained on the table unchanged. Marc Wainer CEO of Redefine Properties said, "The offer made by Redefine was the right one; for Redefine investors, Fountainhead investors, and for those invested in both, although the decision as to whether or not to accept Redefine’s offer lies with Fountainhead’s investors."

During talks with Fountainhead in December, Redefine reaffirmed its intention by raising its bid and offered 56 of its shares and 4.5 Hyprop Investments Ltd (HYP) shares for every 100 Fountainhead units, equating to R8.70 at the time.

Despite Fountainhead board's decision in December to proceed exclusively with Redefine's offer, Growthpoint revised its offer in February giving the latter until February 22 to conclude a formal sales agreement.

Growthpoint's offer came close to R10,4 billion against Redefine's R10 billion based on share-swap ratios.

"The acquisition of Johannesburg-based Fountainhead would increase Growthpoint’s exposure to the retail sector, where it is underweight,” Mr Sasse said.

Fountainhead did confirm that it had received a revised offer from Growthpoint, and said its independent committee of the board of directors was, subject to its exclusivity obligations, reviewing Growthpoint’s revised proposal.

The bidding war between listed property companies took a surprise turn yesterday, with Redefine reporting that it had decided against proceeding with its proposal to acquire the assets.

Citing delays in the process from conclusion, Redefine said yesterday that it had resolved not to proceed with its proposal to acquire the property portfolio of Fountainhead in order to protect and safeguard the interest of Fountainhead, Fountainhead unit holders and Redefine and to allow the board to focus fully on the active management and administration of Fountainhead.

Commenting on the withdrawal, "The manner, in which this transaction has been dealt with by the independent committee of the board and by the Fountainhead trustees, has caused protracted delays and uncertainty, which is now having a significant detrimental impact on the Fountainhead assets and day-to-day running of the business," Mr Wainer said.

As announced previously‚ Redefine resolved some time ago that‚ if its proposal to acquire the assets of Fountainhead was not successful‚ it would seek to obtain a meaningful stake in Fountainhead in order to ensure alignment of interests between Redefine and Fountainhead unitholders.

Redefine reported that it had acquired 18 percent of Fountainhead’s units, making it the largest unitholder in the trust, and intended on an accelerated basis to offer to acquire further Fountainhead units from unitholders.