Safari board shenanigans prompt harsh words from suitor

A fight around the takeover of mall owner Safari Investments has again placed the spotlight on corporate governance in the listed real estate industry, at a time when the sector is still reeling from the Resilient property stable scandal.  

The latest saga is likely to dent confidence in listed property as it tries to recover from 2018, its worst year in memory. More than R120bn was lost after a sell-off of shares in the Resilient group of companies, which were later cleared of any wrongdoing. The sector lost 25.26%, including capital growth and dividends, but it has shown some signs of recovery so far in 2019.

Safari, which owns malls in lower-income areas as well as in Swakopmund, Namibia, has been a takeover target this year. In March, JSE-listed mall owner Fairvest made a share swap offer for Safari but later backed down after Community Property Company (Comprop), an unlisted company, made a superior cash offer worth R1.8bn in July.

But while Fairvest has pulled its offer, critics have said that Safari’s board will not even consider Comprop’s bid because Comprop’s takeover would lead to the delisting of Safari and its executive not being retained.   

Comprop on Tuesday published a statement, approved by the department of trade & industry’s takeover regulation panel, on the JSE’s Sens in which it said Safari’s board was stopping its shareholders from considering its offer.

It said this was indicative of poor corporate governance and that the board was not acting in the interest of its shareholders.

Comprop in July announced it wanted to buy out Safari for R5.90 a share. This offer was higher than a share swap offer that Fairvest made, which valued Safari at R4.30 a share.

But Safari’s board refused to discuss Comprop’s offer at its annual general meeting in August and later said that more than 25% of Safari shareholders had said in letters that they would vote against Comprop’s offer.

Activist shareholders Albie Cilliers of Cilandia Capital and Chris Logan of Opportune Investments as well as institutional shareholder Bridge Fund Managers have demanded that these letters be published. Now Comprop has expressed its frustration, saying it will pull its offer if the letters are not published.

Allan Wentzel, chair of the independent board of Safari Investments, said on Tuesday that it wanted to engage with Comprop and had sent letters to the company raising concerns about the offer.

“These concerns include aspects of the legal terms of the Comprop proposal which, if put in their present form, could give rise to unnecessary risks to Safari shareholders of the deal failing, even if approved by Safari’s shareholders,” he said.  

He said Comprop had not responded to this letter and instead had unilaterally published its letter to Safari dated September 9.

“While it is not our intention to be drawn into a public spat, which is in neither party’s interests, we feel it is necessary at this stage to note that Comprop’s letter contains various significant omissions and inaccuracies,” he said.

andersona@businesslive.co.za