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Takeover Regulation Panel - Community Property Company Proprietary Limited (“Comprop” or “the Company”)
TRP - Takeover Regulation Panel - Community Property Company Proprietary Limited
(“Comprop” or “the Company”)
Whilst this announcement has been released under the TRP code, the release hereof remains the
responsibility of the board of directors of Comprop, who accept responsibility for the information
contained in this announcement.
The shareholders of Safari Investments RSA Limited (“Safari”) are advised that a letter was sent to the Safari
independent board of directors by Comprop and in the interests of transparency, Comprop wishes to disclose
such letter to all Safari Shareholders. A copy of the letter is set out in its entirety hereafter.
09 September 2019
Safari Investments RSA Limited
410 Lynnwood Road
Lynnwood
Pretoria
0081
For the attention of: Mr. Allan Wentzel
Copied to: Dr. Mark Minnaar (Independent Board)
Mr. Chris Roberts (Independent Board)
Dear Sirs,
UPDATE IN RESPECT OF THE FIRM INTENTION BY COMMUNITY PROPERTY COMPANY
PROPRIETARY LIMITED (“COMPROP”) TO ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF
SAFARI INVESTMENTS RSA LIMITED (“SAFARI”)
1 Introduction
1.1 On 19 July 2019, Comprop met with representatives of and advisors to Safari to present a firm intention
all cash offer to acquire the entire issued share capital of Safari at a price of R5.90 per Safari share
(“Comprop Offer”). Rand Merchant Bank (“RMB”) provided the cash confirmation in respect of the
Comprop Offer and the offer was supported by five legally binding irrevocable undertakings from Safari’s
largest shareholders representing 55.7% of the issued share capital of the company.
1.2 The Comprop Offer was made on the basis that it would be implemented by way of a scheme of
arrangement in terms of section 114 of the Companies Act (the “Scheme”) proposed by the board of
directors of Safari (“the Safari Board”) between Safari and its shareholders.
1.3 The Comprop Offer represents:
1.3.1 a 38.8% premium to R4.25, being the clean price per share as at 18 July 2019;
1.3.2 a 28.5% premium to R4.59, being the clean 30-day volume weighted average price (“VWAP”) per
share as at 18 July 2019;
1.3.3 a 42.2% premium to R4.15, being the implied clean offer price per share in the proposed merger
between Fairvest Property Holdings Limited (“Fairvest”) and Safari on an implied swap ratio of 2.22
Fairvest shares for each Safari share (“Fairvest transaction”); and
1.3.4 a 27.4% premium to the clean 5-day VWAP per share of R4.63 to 6 September 2019, the business
day prior to this letter being signed.
2 Firm intention announcement (“FIA”)
2.1 Following the meeting of 19 July 2019, Comprop engaged with Safari, through its advisors, on several
occasions to understand why the Comprop Offer was not announced, especially after the
announcement of termination of the Fairvest transaction.
2.2 It was our understanding that the Safari independent board (“Safari Independent Board”) was reluctant
to proceed with the publication of a FIA on the basis of its belief that in excess of 25% of Safari
shareholders would vote against the Scheme.
2.3 As such, Comprop advised the Safari Board in writing on 16 August 2019 that:
2.3.1 it believed it to be inappropriate for the Safari Independent Board to canvass Safari shareholders as
to how they would vote on the Comprop Offer prior to having appointed an independent expert and
having obtained independent advice as to whether the Comprop Offer was fair and reasonable to
Safari shareholders (“fairness opinion”);
2.3.2 in Comprop’s opinion (and that of a significant number of Safari’s shareholders) Safari should publish
the FIA without any further delay and should work together with Comprop to issue a scheme circular
to Safari shareholders, which would include an appropriate and considered view of the merits of the
Comprop Offer and would give shareholders the right to fully evaluate the Comprop Offer and
ultimately exercise their right to vote on the Scheme. If, during this process, it became clear that in
excess of 25% of Safari’s shareholders were not in support of the Scheme, then Comprop would agree
that it would be appropriate to cancel the Scheme meeting; and
2.3.3 it was concerned that publication of a FIA had been delayed as a consequence of the Safari
Independent Board’s unsubstantiated belief that in excess of 25% of Safari shareholders may vote
against the Scheme.
3 Letters of intent and shareholder engagement
3.1 Comprop understands that, without obtaining a fairness opinion from an independent expert in respect
of the Comprop Offer, the Safari Independent Board have obtained letters of intent (“Letters of Intent”)
to vote against the Scheme from Safari shareholders holding in excess of 25% of the voting rights in
Safari.
3.2 The Safari Board has been requested by its shareholders to publicly disclose the Letters of Intent on
Safari’s website, like Safari has done with the irrevocable undertakings obtained from Safari
shareholders by Comprop, in order to enable those Safari shareholders wanting to engage on the
Comprop Offer to do so meaningfully.
3.3 Comprop believes that the Letters of Intent are not legally enforceable and thus do not constitute
sufficient grounds for the Safari Board not to proceed with the publication of a FIA. Comprop is therefore
highly supportive of the disclosure of the Letters of Intent and any Safari shareholder engagement that
may result from such disclosure. As previously mentioned, Comprop is also ready and willing to engage
with any Safari shareholder to discuss the merits of the Comprop Offer.
4 Southern Palace shares voting rights
4.1 Comprop believes the current position of the Safari Independent Board to abstain from voting the
Southern Palace shares at a Scheme meeting, instead of voting such shares in accordance with the
wishes of Southern Palace as recorded in the irrevocable undertaking given by Southern Palace to
Comprop, will, if maintained, constitute frustrating action by the Safari Independent Board and is
indicative of a negative attitude of the Safari Board towards the Comprop Offer.
5 Offer price
5.1 Since the Comprop Offer was presented on 19 July 2019 there has been further deterioration in the
property sector, as is evident in the further weakness of JSE listed REIT’s share prices. Despite this
weakness, the Comprop Offer at R5.90 (ex distribution) is not being reduced.
5.2 Comprop believes that the Comprop Offer would enable Safari shareholders to unlock significant value
at a price level in excess of that which they are likely to otherwise attain in the medium to long term by
remaining invested in Safari. To the extent that Safari shareholders are not agreeable to a transaction
at this price, Comprop will likely withdraw its proposal in order to pursue other interests. In Comprop's
view, Safari shareholders are likely to lose in excess of R500 million in value should this occur (being
the differential between the offer price of R5.90 and the Safari clean share price prior to Fairvest
transaction being announced).
6 Requests from large shareholders
6.1 We have been requested by certain of the large Safari shareholders to give them an opportunity to
discuss the Comprop Offer with other Safari shareholders and the Safari Board. These large
shareholders have assured us of their intentions, in their capacities as Safari shareholders, to progress
the deal. On the basis of these assurances we have agreed not to withdraw the Comprop Offer for the
time being.
7 Conclusion
7.1 Comprop remains frustrated by the Safari Board’s current position in respect of the Comprop Offer and
is concerned that the actions of the Safari Board are denying Safari shareholders an opportunity to
properly consider the Comprop Offer (as set out in detail in a Scheme circular, which includes an
independent a fairness opinion) and to cast a considered vote at the Scheme meeting.
7.2 This concern and frustration is exacerbated by the fact that the Safari Board showed no hesitation in
openly supporting the Fairvest transaction in an announcement on SENS on 1 July 2019, despite this
being at an effective price of R4.15 per Safari share. Comprop finds it perplexing that the Safari Board
could propose a transaction at R4.15, but not propose the Comprop Offer at an effective R5.90. We
struggle to comprehend how this position is in the interests of Safari shareholders.
7.3 In light of the above, Comprop believes that the Safari Board should honour its shareholders’ request
to make the Letters of Intent available to all Safari shareholders who should be afforded due time to
consider the Letters of Intent, as well as time for the aforementioned Safari shareholder engagement to
occur. Once this process has been completed, Safari would be expected to announce the FIA, failing
which Comprop will consider the withdrawal of the Comprop Offer, which we believe will result in
significant losses to all Safari shareholders.
Responsibility statement
The board of directors of Comprop accepts responsibility for the information contained in this announcement.
10 September 2019
Date: 10/09/2019 07:30:00
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