THE JSE’s largest property group, Growthpoint, said on Monday it intended acquiring significant stakes in Acucap Properties and Sycom Property Fund in a deal worth R4.66bn, to add retail exposure to its portfolio.
Growthpoint’s offer of 1.1 of its shares per Sycom share sent Sycom’s price up as much as 11% before it closed 8.1% higher at R26.01. Growthpoint fell 1.8% to R24.55, making its 1.1 swap offer worth about R27.
Growthpoint’s market capitalisation, at Monday’s share prices, was R51.4bn, Acucap’s R8.4bn and Sycom’s R5.2bn.
If accepted, the offer would see Growthpoint acquire a 34.9% stake in Acucap and a 31.5% stake in Sycom Property Fund.
Acucap and Sycom are sister companies, which previously announced their intention to merge later this year. Once this initial transaction was complete, and should the merger between Acucap and Sycom progress, Growthpoint would hold about 38% of the merged entity.
Acucap already owns a 33.39% stake in Sycom as well as 100% of its management firm. Both are managed by Paul Theodosiou.
Growthpoint CEO Norbert Sasse said on Monday the deal was strategic. “This acquisition has secured strategic stakes for Growthpoint in Acucap and Sycom, which are in the process of a proposed merger.
“As a major investor in both entities, Growthpoint supports the merger plans currently on the table. We are exploring options and alternatives available to us to eventually take control of the merged entity, which we intend to discuss with management and the board of Acucap when appropriate,” he said.
Growthpoint has been looking to acquire retail assets for more than a year, according to analysts. A merged Acucap and Sycom would own a number of regional shopping centres including Festival Mall in Kempton Park, Ekurhuleni, Greenacres Shopping Centre in Port Elizabeth, and Key West in Krugersdorp.
Growthpoint recently failed to get its hands on Fountainhead Property Trust. Redefine Properties became the biggest participatory unit holder in Fountainhead instead.
Last week, Fountainhead and Redefine announced they were in talks for a total takeover.
The market took well to Growthpoint’s move to buy the stakes in Acucap and Sycom.
Acucap’s share price rose 3.84% on Monday to R46 from R44.3 by the end of trade. Sycom’s price rose R2.24, or 8.1%, from R24.06 to R26.01.
“Growthpoint is probably the only listed property company big enough to pull a deal like this off. It is an impressive deal which would make Growthpoint twice the size of Redefine. We don’t own stakes in any of the three funds but it is a deal that we would support if we did ,” Grindrod Asset Management portfolio manager Geoff Noble said.
Meago Asset Managers director Jay Padayatchi said the deal was surprising.
“By acquiring Acucap and Sycom investors have less choice in the listed sector. There is also the potential loss of high level skills from the funds.”