Emira makes a play for SA Corporate

In the latest proposed merger in the property sector, the real estate investment trust says there’s compelling rationale for a tie-up.

Emira Property Fund plans to make an offer for SA Corporate Real Estate (SAC) as consolidation of JSE-listed real estate investment trusts (REITs) gains pace.

Emira said it approached SA Corporate’s chairperson more than a month ago with its proposed all-share offer, but hadn’t received a formal response from SAC’s independent board. Its indicative offer of 0.25 Emira shares for each SAC share implies an offer price of R3.47, a 5.9% premium based on their closing share prices on Tuesday. Based on the 30-day volume weighted average prices of both shares, an offer price of R3.45 comes at an 18% premium.

Emira has a market capitalisation of just under R7.2 billion while SAC is worth about R8.35 billion.

Given the compelling rationale for a merger of Emira and SAC, Emira affirms that, while it has not yet communicated a firm intention to make an offer to SAC, it is ready, able and willing to proceed with the Proposed Transaction and hopes to engage with SAC in a constructive and co-operative manner, in order to complete its due diligence and submit a binding offer to SAC in line with the terms set out above,” Emira said.

Emira’s is the third offer so far this year. Earlier this week, Arrowhead Properties released the terms of its reverse takeover of Gemgrow, which is aimed at improving liquidity and gaining better access to equity capital markets through their combined size. Fairvest Property Holdings and Safari Investments are also moving ahead with a merger that the two group say will save costs and result in a more efficient property portfolio.The increased market capitalisation of the bigger REIT is also expected to improve liquidity in the trading of Safari’s shares.

Emira’s shares declined by 2.9% to R13.49 yesterday while SA Corporate rose 2.7% to R3.37.