Redefine opposes Delta-Rebosis merger

The company would advise shareholders to vote against the merger.

The proposed merger between two of South Africa-based real estate companies, Delta Property Fund and Rebosis Property Fund, has hit a snag, with Redefine Properties saying it is against the deal.

Redefine Properties, which was previously a shareholder in Delta until it sold its interest to a BEE consortium, said in a pre-close presentation on Monday that it did not support the merger and would advise shareholders to vote against it.

Redefine sold its 22.8 percent stake in Delta to BEE consortium Cornwall Crescent for R1.46 billion in 2017. Redefine said it had started talks with Delta Property Fund “regarding non-support” for Delta’s potential merger with Rebosis.

“We don’t think the deal would be beneficial for Delta’s shareholders but only for Rebosis shareholders,” Redefine CEO Andrew Konig (pictured) said. Since Delta and Rebosis announced merger plans earlier in August, they haven’t released information around the proposed merger including the valuation of the deal and how it will be structured.

A successful merger could help both companies create an enlarged entity that can ride out tough economic conditions.

Both companies have seen sharp declines in their share prices so far this year, with South Africa’s economic slowdown impacting commercial property and shopping mall landlords. 

Delta and Rebosis both have a focus on retail and commercial property in South Africa. Their office properties are occupied by government departments, whose leases are signed by the Department of Public Works. The potential merger is also about two real estate barons, Sandile Nomvete (founder and CEO of Delta), and Sisa Ngebulana (founder and CEO of Rebosis) joining forces. 

If successful, the potential merger will create an entity with a market value of about R2 billion and that operates a more than R20 billion portfolio of shopping centres and offices occupied by government departments.