Safari Investments receives US$130.13m buyout offer from Comprop

SOUTH AFRICA – Johannesburg Stock Exchange mall owner, Safari Investments has received a US$130.13m (R1.8bn) buyout offer from unlisted Community Property Company (Comprop).

The offer comes at a time when Fairvest and Safari are preparing for a “friendly merger”, which the duo announced in March that would create a company with US$433.76 million (R6bn) worth of assets.

Comprop has offered Safari’s shareholders R5.90 (US$0.43) per share, a hefty 38.5% premium compared to Friday’s closing price of R4.22 (US$ 0.31) and could mean an end to Safari’s proposed merger with peer Fairvest Property Holdings.

However, the offer is viewed as a game changer. It would be surprising if Safari shareholders could turn down Comprop’s offer, said Old Mutual Investment group fund manager Evan Robins.

“Fairvest will be disappointed. The friendly merger made great strategic sense for them,” Robins notes.

JSE-listed Safari owns seven malls in South Africa and one in Namibia, the Platz am Meer mall in Swakopmund as well as a private day hospital in Soweto.

Comprop had purchased and developed 34 shopping centres over the past 20 years, focusing on underserviced communities in rural areas and townships in eight of South Africa’s nine provinces, Safari said.

According to a Business Live report, the value of the portfolio was estimated at US$325.32 million (R4.5bn).

Safari’s share price had been under pressure in 2019 including a 9.68% fall in June, till the announcement of the offer which saw its shares surge as much as 24.4% to R5.30 (US$ 0.38) on Monday, a 10-month high.

The company had reported then that while revenue had increased 18.5% to US$21.76 million (R301m) in the year to end-March, expenses rose 48.5%.

The company cited a challenging local retail environment that put period rental renewals and escalations under pressure, as it slashed its distribution per share 26.4% to 50c.

Safari and Fairvest had announced a proposal earlier in July that would see Fairvest investors exchanging their shares for a stake in Safari, using a swap ratio of 0.45 Safari shares for each Fairvest share.

While Comprop’s offer was difficult to counter, it did show that despite the challenges and volatility within the property sector, there was value in underlying assets in dominant sectors with the potential to do well, head of listed property funds at Stanlib Keillen Ndlovu said.

It shows that despite the challenges or volatility facing the listed property sector, there is value in the underlying assets if they are dominant, have the potential to do well and are in the right locations, he said.

“The price offered is not easy to counter. This effectively means that the merger is unlikely to go ahead,” Ndlovu said.

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