Platz Am Meer shopping centre in Swakopmund, Namibia. Picture: SUPPLIED
Platz Am Meer shopping centre in Swakopmund, Namibia. Picture: SUPPLIED

Safari Investments and fellow low-income retail centre owner Fairvest have shelved plans to merge following a backlash from Safari shareholders, who said the deal undervalues their company. 

This sent Safari’s shares 9.05% higher to R5.30 at the close on Wednesday, its biggest jump in three-and-a-half weeks.

The rejection of Safari’s offer for Fairvest helps clear the way for potential rival bids from unlisted group Comprop and other suitors.  

The two companies had been in merger talks since March when a share-swap deal was proposed, but Comprop, an unlisted group, made a more attractive cash offer in July to buy Safari outright for R1.8bn. 

Cape Town-based Fairvest, which owns malls in small towns and semi-urban areas, wanted to merge with Safari, the owner of  shopping centres in lower-income areas mostly located in Tshwane, because of strong potential synergies and cost savings that could result from a merger. 

Safari also owns a shopping centre, Platz Am Meer, in Swakopmund, Namibia. 

In terms of the deal, Safari would have acquired all of Fairvest by way of a friendly merger with a swap ratio of 0.45 shares for each Fairvest share. Safari’s executive management and its listing would have also been retained. The deal valued each Safari share at R4.30.

However, Comprop’s offer, which would lead to the delisting of Safari, valued each share at R5.90. Comprop has not said if it would retain Safari’s management.

Chris Logan, chief investment officer at Opportune Investments, said on Wednesday that Comprop’s offer is clearly stronger and better for shareholders.

Chief investment officer at Opportune Investments Chris Logan. Picture: HETTY ZANTMAN
Chief investment officer at Opportune Investments Chris Logan. Picture: HETTY ZANTMAN

Logan had questioned Safari’s directors last week at their annual general meeting about why they were still entertaining Fairvest’s weaker offer. The directors had declined to comment on either Fairvest or Comprop’s offers. 

Albie Cilliers, head of Cilandia Capital, wanted to understand how the Safari board viewed the takeover offers. But the directors declined to comment on either Fairvest or Comprop’s offers and the meeting descended into arguments.

Cilliers told the meeting Safari was in breach of company law.   

Section 61 (8)(d) of the Companies Act compels public companies to provide for “any matters raised by shareholders, with or without advance notice to the company”.

Logan said the annual general meeting had become a farce. “This is our one opportunity a year to ask questions. You seem to be acting as if this is a second-rate conference call,” he said.


Safari said in a statement on Wednesday that Comprop had undertakings from five Safari shareholders who held 55.7% of the company’s shares that they would vote against all resolutions required to implement the Fairvest merger. They had also given undertakings to vote in favour of the Comprop deal. 

Hopes that Fairvest might make a counter offer to Comprop’s were also dashed on Wednesday after MD Darren Wilder said the group could not compete with Comprop, given its investment criteria.

“The current cash offer equates to a less than 8% equity yield for the assets. An offer at this level would not be beneficial to Fairvest shareholders over the long term,” he said. 

“In tough economic times, it is critical only to pursue transactions that ensure long-term value creation,” he said.  

Institutional investors in listed property countrywide have called on property counters to consolidate into larger, more liquid companies that can offer dividends that exceed inflation growth.

Logan said other companies may still make plays for Safari. 

Zayd Sulaiman, a fund manager at Catalyst, said if Comprop succeeded in its bid, the listed sector would have one fewer counter.

“As a specialist listed property manager, we would prefer a larger sector with specialist focused companies to invest in. Thus, rather than delistings, we would prefer consolidation of companies with similar property portfolios with specialist management,” he said. 

The Comprop offer nevertheless appears to be compelling and Safari’s board “have a fiduciary duty to do what’s best” for its shareholders, Sulaiman said.