Rebosis, Delta to explore merger

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Roy Cokayne

A simmering hostile takeover battle between listed property companies Rebosis and Delta for control of Ascension Properties appears to have been averted. This follows a written co-operation agreement between the three companies with the intention of exploring a merger.

The three companies said yesterday that the proposed merger would establish the largest listed black economic empowerment property fund on the JSE with an anticipated property portfolio valued at more than R16.5 billion and a market capitalisation in excess of R9.5bn.

This follows Delta and Rebosis earlier this month both announcing details of shares acquired or secured in Ascension and both claiming to have valid agreements for the acquisition of Ascension Management Company (Manco).

Delta said it had a valid contract signed by Shaun Rai, the chief executive of the Cape Empowerment Fund and a founder and executive director of Ascension, for the acquisition of about 74 percent of Ascension Manco. Ascension and Rebosis countered this by reporting the boards of the two companies had concluded a written co-operation agreement to explore in the utmost good faith a merger to enhance their market capitalisation, investor liquidity and prospects.

The two companies added that Rai had undertaken, on request, to accept an appointment to the Rebosis board.

In an interview with Business Report, Rai confirmed he had signed an agreement with Delta and denied he had signed two agreements for the sale of Ascension Manco.

However, Rai said Wayne Arendse, a trustee and beneficiary of the Sunset Trust, had a pre-emptive right and had exercised it.

Rai said Arendse’s pre-emptive right took precedence over his agreement with Delta.

Explaining the rationale for the proposed merger yesterday, Delta, Rebosis and Ascension said capital available to smaller real estate investment trusts was increasingly constrained, driving consolidation and corporate activity.

The proposed merger would fast track the growth aspirations of each of the companies as strategic platforms were consolidated. It would also be better able to make further yield-enhancing acquisitions.

Its increased size should give it greater access to debt and capital markets at competitive rates and have a lower cost base, improving the prospects of the merged entity, they said.

The merged entity was also expected to attract interest from a wider group of investors, thereby increasing its liquidity and possibly resulting in a re-rating, they added.

The swap ratio and structure of the proposed merger will be determined and agreed after the satisfactory conclusion by each of the parties of a due diligence investigation on the other parties and an independent valuation of each of their property portfolios.

The proposed board of the merged entity is in the process of being finalised and will be announced in due course.

Linked unitholders of Ascension, Delta and Rebosis were advised to continue to exercise caution when dealing in their linked units until further announcements were made.

Rebosis shares were unchanged on the JSE, closing at R10.62, while Delta shares added 1.12 percent to R8.15. Ascension’s A shares lost 1.26 percent to R4.69 and its B shares lost 2 percent to R2.45.


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