ARROWHEAD Properties’ independent board has deemed the proposed merger between the company and Fairvest Property Holdings to be in the best interest of its shareholders.
On Tuesday, Arrowhead said the independent board was strongly of the view that the benefits of a deal between Fairvest and Arrowhead would best be unlocked through a merger that created a single, larger and more liquid REIT.
In that regard, the board considered a merger preferable to a transaction that would result in Arrowhead becoming a listed subsidiary of Fairvest, where neither company would fully enjoy the benefits of increased size or liquidity and where there would be less ability to take advantage of the synergies or operational efficiencies that might be unlocked through a merger.
Engagements had begun with Fairvest, and it was considered likely that agreement would be reached between the parties on the way forward, Arrowhead’s management said.
Last month, Cape Town-based Fairvest said it had concluded agreements with shareholders of Arrowhead to acquire 50.1 percent of the fellow JSE-listed property counter’s B shares. That after it first mooted the deal on April 29 this year.
Fairvest had proposed a share swop arrangement through the issue of new Fairvest shares, at a ratio of 1.85 Fairvest shares per Arrowhead B-share.
Fairvest said it had also received undertakings of support from 63.7 percent of its shareholders to vote in favour of the resolutions required to implement the swop agreements.
Fairvest Properties’ share price was up 2.7 percent, to R1.90, on Monday morning, while Arrowhead’s price was flat, at R11.
Of the two groups, Arrowhead is the bigger with an approximate R11 billion portfolio of some 200 properties, 47 percent of which was derived from retail, 36 percent off and 17 percent industrial. It also has a 55.7 percent in residential REIT Indluplace, 8.6 percent in Dipula “B” shares.
Fairvest has a R3.16bn portfolio of some 42 commercial, mostly lower income retail properties that have been proven resilient through the lockdown.
Consequently, Fairvest was one of few property groups able to declare a dividend of 10.59000 cents per share for the six months to December 31, this after total attributable income grew to R174.8 million from R149.8m over the period.
Arrowhead, on the other hand, did not declare a dividend for the six months to March 31, due to uncertainty brought about by the Covid-19 pandemic, notwithstanding that its attributable profit turned around, to R432.4m profit from a R113.6m loss in 2020.