CEO of Safari Investments RSA Limited – Dirk Engelbrecht and CEO of Heriot REIT – Richard Herring
Safari Investments, a listed owner of shopping centres in small towns and townships on Tuesday June 7 2022 said it had acknowledged that Heriot Reit wanted to take the real estate investment trust (Reit) over through buying shares for cash.
Safari, which has a market capitalisation of R1.7bn and a retail portfolio including malls worth more than R3.3bn, has been a takeover target for a number of years. JSE-listed Fairvest has previously tried to buy the group out.
On Friday June 3, Heriot Reit’s subsidiary Heriot Properties, made an offer to buy a portion of shares in Safari which it didn’t already own for R5.60 in cash a share.
Heriot Properties, together with two concert parties, Heriot Investments and Reya Gola Investments hold 102 851 903 shares in Safari Investments, being 33.1% of all shares in issue. Heriot intends to increase its investment in Safari, which is strategic.
Heriot’s CEO Steven Herring said a takeover deal would pump liquidity into the company giving shareholders the opportunity to get cash.
“To this end, Heriot has informed the Safari Board that Heriot Properties will make a general offer to purchase Safari shares at an offer price of R5.60 per Safari share. The general offer will afford Safari shareholders an opportunity to sell their Safari shares for a cash price that is at a premium to the recently traded price of Safari shares,” Herring said.
“In Heriot’s view, the stand-alone prospects for Safari are constrained, given that investors generally prefer to invest in Reits that have larger market capitalisations and offer great liquidity to shareholders than Safari. Heriot notes that, as the largest shareholder in Safari, it would not support any proposal by Safari to make any acquisitions or issue new shares given that the market price for Safari shares is at a discount to Safari’s NAV per share,” he said.
Safari has been a takeover target in the past with JSE-listed Fairvest having tried to take over the company.
Heriot owns roughly 40% of Safari. A bankrupt construction group which is winding up, called Southern Palace owns a portion of roughly 20% of the shares in issue. These shares will be given back to Safari in time.
The combined Heriot and Safari company would be worth R4.7bn in terms of market capitalisation.