Growthpoint talks to FSB about offer exclusivity

Roy Cokayne

Growthpoint Properties has engaged with the Financial Services Board (FSB) and trustee of Fountainhead Property Trust about the “perplexing” decision of Fountainhead’s board to engage exclusively with Redefine over its offer for the trust’s assets.

However, Growthpoint chief executive Norbert Sasse said yesterday that Growthpoint was not a unitholder in Fountainhead and did not have any legal right to lodge a complaint with the regulator, which had an obligation to look after the best interests of shareholders.

Sasse said Growthpoint had highlighted to the FSB and the trustee, FirstRand, the inherent conflict of interests within Fountainhead and the perplexing decision taken to engage exclusively with Redefine, given that Growthpoint’s offer for Fountainhead’s property assets was “substantially better” than the offer lodged by Redefine.

It was up to Fountainhead unitholders to lodge a complaint if they felt they were being prejudiced, he said.

The conflict of interests referred to by Sasse relates to the fact that Redefine owns Fountainhead’s management company and has made an offer for Fountainhead’s assets.

Growthpoint claimed last year that its offer was about 4 percent higher than the amended offer submitted by Redefine. It said Redefine’s offer was worth about R10 billion and Growthpoint’s R10.4bn.

The independent committee established by Fountainhead last year to consider the rival unsolicited bids from Redefine and Growthpoint decided in December to engage exclusively with Redefine.

This exclusivity will expire if a written sale agreement has not been concluded with Redefine by January 31.

One of the reasons Fountainhead gave for its decision to engage exclusively with Redefine was the threat of litigation. This is believed to relate to a warning by Redefine in October that it would not walk away from the R660 million it had paid for the Fountainhead management company. This followed Growthpoint lodging its rival bid, which excluded any payment for Fountainhead’s management company.

Growthpoint said this was most disturbing and requested clarity about it because “clearly it has weighed heavily on the decision of Fountainhead’s board to pursue an offer that is R400m inferior”.

Sasse said Fountainhead’s board still needed to “come clean” about the nature of this threat and Growthpoint had not yet received any response from Fountainhead’s board.

He also denied a Bloomberg report that Growthpoint might increase its offer for Fountainhead’s assets.

There was always an option to increase an offer but it was not something Growthpoint was considering or contemplating at the moment, particularly as its current offer was subject to a due diligence.

Growthpoint units closed 1 percent down at R25.35.