The bidding war between listed property companies Redefine and Growthpoint for the property assets of listed Fountainhead Property Trust took a surprise turn yesterday, with Redefine reporting that it had decided against proceeding with its proposal to acquire these assets.
However, Redefine also gave notice it had not thrown in the towel in its efforts to acquire Fountainhead’s assets and had taken decisive action to protect and safeguard the interests of Fountainhead, Fountainhead unitholders and Redefine as owner of Fountainhead’s management company, while also blocking efforts by Growthpoint to acquire Fountainhead’s assets.
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.
It had also bolstered the executive capacity and property experience on the board of Fountainhead’s management company by appointing Redefine chief executive Marc Wainer, chief operating officer David Rice and retail director Mike Lewin to its board.
Redefine said it had done this to ensure the board of the management company was able to deal urgently with the challenges facing Fountainhead and its portfolio.
Redefine also gave notice of its intention to acquire up to 175 million additional Fountainhead units, in tranches of not less than 1 million, in return for Hyprop units at a ratio of 12.15 Hyprop units for every 100 Fountainhead units sold.
The offer was open for acceptance until it had been filled or the close of business today.
Redefine stressed that its legal advice, confirmed independently by two senior counsel, had consistently been that Growthpoint’s offer or any similar proposal lay outside of the administration of Fountainhead. Accordingly the board of Fountainhead’s management company was “obliged not to entertain, agree to or seek to implement such a proposal”, and Redefine was in a position to block the Growthpoint offer or any similar proposal.
It said uncertainty had been created by the delay in completing its offer for Fountainhead’s assets despite having reached agreement on all material terms of a sale agreement with the independent committee of the board of Fountainhead’s management company.
This uncertainty was having a significant detrimental impact on Fountainhead’s assets and daily business and three key staff members had resigned, negotiations with potential tenants were being complicated, key decisions around capital expenditure and the like were not being made with the urgency required and significant advisory costs were being incurred, it said.
Redefine units fell 0.91 percent to R9.79, while Fountainhead rose 0.44 percent to R9.16.