Safari scuppers Comprop deal


Safari scuppers Comprop deal

Published Date: 2019-10-17 | Source: Stephen Gunnion | Author: Stephen Gunnion

Safari scuppers Comprop deal

The property investment company says it has enough support to ensure that a scheme of arrangement has no prospect of succeeding.

Safari Investments says it won't recommend a buyout offer by Community Property Company (Comprop) after it was unwilling to budge on price or agree to compensate it for out-of-pocket costs if the deal fell through.

In July, Comprop offered to buy Safari for R5.90 per share, valuing the company at R1.83 billion. The ex-dividend offer price represented a 38.5% premium to Safari's share price ahead of Comprop's initial announcement. An independent board hired BDO Corporate Finance to express an opinion. Although BDO said the offer was reasonable and fair, with an acceptable price range lying between R5.80 and R6.67, Safari said it fell shy of its expectations.

Comprop's offer for Safari trumped an earlier friendly merger proposal from Fairvest, which worked out at an effective price of R4.15 per share. That offer has since been withdrawn.

While Comprop's offer has the backing of five of Safari's biggest shareholders with 55.7% of its issued shares, Safari said more than 100 shareholders holding about 28% of its shares had given irrevocable undertakings to vote against the deal in its current form. The offer was proposed as a scheme of arrangement, which requires the approval of at least 75%.

With the offer remaining at the lower end of BDO's guidance and no agreement with Comprop around certain legal and commercial aspects of the Comprop Proposal, including the cost recovery and the significant cost it would incur if it proceeded with the scheme, Safari said its independent board wasn't in a position to recommend that it propose it to shareholders.

Safari owns seven shopping centres in South Africa and one in Swakopmund, Namibia. Comprop is an unlisted property fund which forms part of Futuregrowth Asset Management's portfolio of developmental investments. Its R4.5 billion portfolio comprises 20 shopping centres, located in eight of the country's nine provinces.

Safari fell 2.2% to R4.50 yesterday. The announcement was made after the close of trade on Monday.

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