Arrowhead’s board deems merger plans good for shareholders

ARROWHEAD Properties’ independent board has deemed the proposed merger between the company and Fairvest Property Holdings in the best interest of its shareholders.

Arrowhead said in a statement on Tuesday that the independent board was strongly of the view that the benefits of a deal between Fairvest and Arrowhead would best be unlocked through a merger that creates a single, larger, more liquid Reit.

The board considered a merger preferable to a transaction that would result in Arrowhead becoming a listed subsidiary of Fairvest, where neither company would fully enjoy the benefits of increased size or liquidity and where there was less ability to take advantage of the synergies or operational efficiencies that may be unlocked through a merger.

Engagements had begun with Fairvest, and it was considered likely that

agreement would be reached between the parties on a way forward, Arrowhead’s management said.

Last month, Cape Town-based Fairvest said it had concluded agreements with shareholders of Arrowhead to acquire 50.1 percent of the fellow JSElisted property counter’s B shares, this after it first mooted the deal on April 29 this year.

Fairvest had proposed a share swap arrangement through the issue of new

Fairvest shares at a swap ratio of 1.85 Fairvest shares per Arrowhead B-share.

Fairvest said it had also received undertakings of support from 63.7 percent of its own shareholders to vote in favour of the resolutions required to implement the swap agreements.

Fairvest Properties’ share price was up 2.7 percent to R1.90 on Monday morning, while Arrowhead’s price was flat at R11. Of the two groups, Arrowhead is the bigger with an approximate R11 billion portfolio of some 200 properties, 47 percent of which was derived from retail, 36 percent off and 17 percent industrial. It also has a 55.7 percent in residential Reit Indluplace, 8.6 percent in Dipula “B” shares and 16.4 percent in Rebosis “B” shares.

Fairvest has a R3.16bn portfolio of some 42 commercial, mostly lower income retail properties that have been proven resilient through the lockdown.

Consequently, Fairvest was one of few property groups able to declare a dividend of 10.59000 cents per share for the six months to end December, this after total attributable income grew to R174.8m from R149.8m over the period.

Arrowhead on the other hand did not declare a dividend for the six months to March, due to uncertainty brought about by the Covid-19 pandemic, notwithstanding that its attributable profit turned around to R432.4m profit from a R113.6m loss last year.