Redefine Properties gets nod for Fountainhead acquisition

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2013 saw Marc Wainer’s Redefine Properties (left) and Norbert Sasse’s Growthpoint Properties (right) entangled in a protracted bidding war for Fountainhead Property Trust, which ultimately ended with Redefine acquiring major stake in Fountainhead. 2013 saw Marc Wainer’s Redefine Properties (left) and Norbert Sasse’s Growthpoint Properties (right) entangled in a protracted bidding war for Fountainhead Property Trust, which ultimately ended with Redefine acquiring major stake in Fountainhead.

Redefine’s planned takeover of Fountainhead Property Trust advanced another major step on Friday when Fountainhead approved the deal to go through and sell its entire property portfolio.

A year ago‚ JSE-listed property heavyweights, Redefine Properties and Growthpoint Properties were entangled in a protracted bidding war for Fountainhead’s retail-dominated portfolio.

This became the biggest property bidding battle ever recorded in South Africa’s listed property sector.

SA's second-largest property company, Redefine, ultimately ended the escalating bidding war by withdrawing its offer and subsequently acquired most of Fountainhead’s shares — a move that made it difficult for Growthpoint to win a unitholder vote to secure the assets.

Growthpoint, SA's largest property company headed by CEO Norbert Sasse, later abandoned its quest to acquire the assets which paved way for Redefine.

Redefine’s acquisition of Fountainhead

In an email statement to SA Commercial Prop News yesterday, Fountainhead enclosed a decision to sell all of its assets in exchange for 82 Redefine shares for every 100 Fountainhead units held.

As part of the transaction Redefine will assume all of Fountainhead’s liabilities, including its interest-bearing debt. The transaction will be effective from 1 September 2014.

Details of the transaction were announced in a joint statement by Redefine and Fountainhead, which is managed by Fountainhead Property Trust Managers Limited (FPTML).

Marc Wainer, CEO of Redefine comments, “We welcome this agreement and are pleased to be taking this transaction forward.”

Redefine is the largest unitholder in Fountainhead, at 65,9%. It is also the owner of FPTML, the asset manager which controls the assets of Fountainhead.

The transaction is subject to the fulfilment of the usual conditions precedent including approvals from Fountainhead unitholders, the Financial Services Board and Redefine shareholders.

FPTML’s independent committee has endorsed the transaction and has recommended that Fountainhead unitholders, excluding Redefine which is a related party, do the same.

For Fountainhead investors, the transaction will provide exposure to a diverse portfolio of property assets valued at R44.5 billion, access to lower costs of capital and the benefits of economies of scale and cost savings thanks to synergies between both property portfolios.

For Redefine shareholders, the transaction means portfolio growth and diversification through the added benefit of increased exposure to retail property. The Fountainhead property portfolio valued at over R12 billion comprises 66 properties.

Once the transaction is finalised, Fountainhead will be delisted from the JSE. 

Fountainhead’s unitholders will receive the final distribution for the six-months ending 31 August 2014.  Their first distribution as Redefine shareholders will be for the six months ending 28 February 2015.

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Listed Property / REITs  |  Growthpoint Properties  |  Redefine Properties  |  Marc Wainer  |  Fountainhead Property Trust  |  Mergers and Acquisitions  |  Norbert Sasse