August 18 2023
JSE-listed diversified property group, Emira Property Fund has made a second attempt to take over, specialist group Transcend Residential.
Transcend and Emira announced jointly via the JSE’s stock exchange news service that Emira intended to make an offer to to acquire all of the issued ordinary shares in Transcend’s capital which it didn’t already own.
“Shareholders of Transcend and shareholders and noteholders of Emira are advised that, on 17 August 2023, Transcend and Emira concluded a scheme implementation agreement pursuant to which Emira intends to make an offer to acquire all of the issued ordinary shares in the share capital of Transcend from the Transcend Shareholders by way of a scheme of arrangement,” they said.
Emira would make the offer to acquire the Transcend shares from Transcend shareholders for R6.30 per Transcend Share, payable in cash. Upon implementation of the scheme, all of the Transcend shares would be delisted from the JSE.
Transcend was listed on the JSE in 2016 by International Housing Solutions (IHS) and its managing partner, Rob Wesselo. It was the second residential specific property fund to list after Indluplace Properties. Indluplace was recently taken over by SA Corporate Real Estate.
Transcend wanted access to institutional investment funding and the potential to use its shares as “acquisition currency” to facilitate growth of its property portfolio and enhance shareholder returns. But Transcend’s ability to meet its objectives is hampered by the lack of investment appetite for small, illiquid counters. It and other small property funds are expected to delist in the coming months as fund managers and other potential investors want to buy into medium and large liquid funds.
“In addition, Transcend Shares trade at a discount to their underlying net asset value, which results in any capital raise at market value being highly dilutive to existing Transcend shareholders. Under these circumstances, the board of directors of Transcend and Emira believe that Transcend’s continued listing on the JSE is not justified and that the limitations imposed by the regulatory processes and costs associated with a JSE listing outweigh the benefits thereof in the current environment,” the groups said in their rationale.
“The Transcend Board has therefore resolved to propose the Scheme to provide Transcend Shareholders with the ability to realise their investment in Transcend at a price that represents, in its view, fair value,” they said.
In accordance with regulation 111(4) and regulation 111(5) of the Takeover Regulations, ABSA Bank has provided an unconditional and irrevocable bank guarantee to the Takeover Regulation Panel and for the benefit of Transcend shareholders, “confirming that, in aggregate, the offeror has sufficient cash resources available to it to satisfy payment of the aggregate scheme consideration”, the groups said.
As at the date of the announcement, the offeror (Emira) holds 111 717 213 Transcend shares, representing 68.15% of the total issued share capital of Transcend. Emira is not acting in concert with any other person.
Emira owns properties in SA and has exposure to US power retail centres.