Rebosis’ takeover of Ascension scuppers merger dream

2015-03-08 15:00

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A takeover offer by Rebosis Property Fund of the smaller Ascension Property Fund has scuppered dreams for a three-way merger with Delta Property Fund.

Earlier, Rebosis and Delta suggested that the merger had been shelved.

Last month, Rebosis – led by chief executive Sisa Ngebulana – announced it would take over Ascension in a share-swap deal, boosting its R7.2?billion portfolio by R2.3?billion.

Delta finance boss Bronwyn Corbett this week said her company would not resume the merger after Rebosis completed its Ascension buyout.

“The proposed tripartite merger was a result of both Delta and Rebosis vying for Ascension at the time,” she said.

Ascension had two-timed the bigger property companies for control of its asset manager, the Ascension Property Management Company.

Ascension sold all of the property manager’s shares to Rebosis for R150?million last February, contrary to an earlier deal.

Ascension director Shaun Rai and his affiliates – who owned 73.28% of the shares – struck a deal with Delta to sell these shares to the company led by Sandile Nomvete.

Announcing this deal, Rebosis and Ascension said the two would explore a merger.

Almost a year later, Rebosis is offering Ascension’s unitholders a share-swap deal as follows: 19.34236 newly created Rebosis A ordinary shares for every 100 Ascension A-linked units, and 23.549 Rebosis shares for every 100 Ascension

B-linked units.

The A-linked units are first in line for income distributions, which cannot grow at more than the rate of inflation each year; the B-linked units receive the residual income, but have faster growth in distributions.

City Press’ calculations – involving dividing the swap ratio of the shares, multiplying that number by Ascension’s share prices on the date of Rebosis’ announcement of the deal, then multiplying this number with the number of units Rebosis does not already own in Ascension – values the deal at about R9.5?billion.

The new deal puts paid to a three-party merger that would have created the largest black-owned listed property company, with assets worth R16.5?billion and a market capitalisation of R9.5?billion.

“It was decided at the time that such a merger would be inopportune, as Delta and Rebosis had different strategies and growth ambitions, respectively,” said Corbett.

Delta was focusing on its government portfolio – a major part of its business – and setting up Delta International, an AltX- and Bermuda-listed fund with assets elsewhere in Africa. The international spin-off now has a portfolio worth $160?million (R1.9?billion) in Mozambique and Morocco.

“Rebosis, on the other hand, has a strong retail focus with some government offices. The fact that Rebosis has decided to make an offer for the rest of Ascension does not automatically trigger any discussions with Delta, as the strategies and growth objectives still remain different at this stage,” said Corbett.

She  said Delta was pursuing a R10?million penalty from Rai for breaching the terms of the agreement he made with Delta, and the matter was “currently with legal arbitration”.

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