Why Comprop and shareholders are frustrated by Safari's board

Why Comprop and shareholders are frustrated by Safari's board

Consolidation in South Africa’s listed real estate is beginning to gain momentum with mid-sized owned companies being acquired by their larger peers to help them tackle their toughest operating environment since the 2008/2009 global economic crisis.

But not all merger transactions have been successful, cordial or beneficial to all parties.  

Real estate group, Fairvest Property Holdings, recently said it has abandoned its merger with shopping mall owner Safari Investments, while Cape Town-based Community Property (Comprop) has upped the stakes.

Unlisted property group Comprop has now launched an R1.8-billion buy-out a bid to acquire the entire issued share capital of Safari.

Comprop, which is part of the Futuregrowth Asset Management stable, and has a R4.4 billion portfolio targeting rural and township retail, said the offer has majority support from Safari’s main shareholders. 

In a turn of events, Comprop has expressed its frustrations at the recent unresponsive conduct of the board of Safari in relation to its bid for the latter company. Comprop said the frustration over the conduct of the Safari board “mirrors similar concerns raised by Safari shareholders at the recent annual general meeting who believe their rights are being compromised.”

The Comprop offer to acquire Safari shares represented a 38.8 percent premium to R4.25, being the clean price per share as at 18 July 2019 and a 42.2 percent premium to R4.15, being the implied clean offer price per share in the proposed merger between Fairvest and Safari on an implied swap ratio of 2.22 Fairvest shares for each Safari share.

 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.  

The Safari independent board was reluctant to proceed with the publication of a Firm Intention Announcement (FIA) on the basis of receipt of a number of non-legally binding letters of intent to vote against the Comprop offer, received from a few small Safari shareholders either holding or purporting to represent shareholders collectively holding in excess of 25 percent of the voting rights in Safari. The Safari board had been engaging with these shareholders on the Comprop offer.

In response, Comprop advised the Safari board in writing on 16 August 2019 that;

  • 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 
  • 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 percent 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
  • 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 percent of Safari shareholders may vote against the scheme. 


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. 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.