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Johannesburg - Redefine Properties, South Africa’s second-biggest property company, increased its stake in Fountainhead Property Trust as the companies started talks about a potential combination.

Merger negotiations between Fountainhead Property Trust Management and Redefine are still at an early stage, Johannesburg-based Fountainhead said in a statement today.

An independent committee of Fountainhead’s board has been established to “progress discussions” and represent investors’ interests, it said.

Redefine boosted its holdings in Fountainhead to 65.9 percent, Fountainhead said in a separate statement, from 61.7 percent in October last year.

“Fountainhead benefits from considerable alignment with and support from its majority unitholder Redefine Properties,” it said.

Fountainhead and Redefine own shopping centres and office parks in Africa’s second-largest economy.

Fountainhead said it expects to produce growth of as much as 8 percent in income distributions from its current portfolio by the fiscal full-year through August. - Bloomberg News