Wednesday, January 19

Emira’s offer to buy is now unconditional

The mandatory offer for the purchase of the JSE-listed Emira real estate investment trust (Reit) run by Maitlantic 10, a subsidiary of the fund’s main shareholder, I Group Consolidated Holdings, is now unconditional.

This follows the Competition Court on Tuesday unconditionally approved the proposed transaction.


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The mandatory offer was triggered by a section of the Corporations Law when Maitlantic’s stake in Emira exceeded the 35% level.

Read: Emira rises to the highest level in more than a year after the purchase offer

In a joint announcement by Emira and Maitlantic on Tuesday, the companies reported that all pending conditions prior to the mandatory offer have been met and that the offer is now fully unconditional, with the Procurement Regulation Panel issuing a certificate of compliance in terms of section 119 (4) of the Capital Companies Act.

The mandatory offer, announced by Emira and Maitlantic on April 23, is for Maitlantic and Clearance Cantara Master Fund, a Cayman Islands-based hedge fund, to acquire all Emira shares it does not yet own for R9.15 per Ordinary Emira. Share.

This values ​​the joint offer at R2.86 billion.

In a JSE Sens announcement published on Tuesday, Emira and Maitlantic referred to Emira’s announcement last week that it has declared a final gross dividend of 66.65 cents per Emira share for the six months to the end of June 2021, which will be payable to Emira’s shareholders of record on September 13.

Last day to trade

The last day to trade the ‘cum’ dividend on Emira shares is September 7.

“Consequently, any Emira shareholder who accepts the mandatory offer as of Wednesday, September 8, 2021 (which is the date that Emira’s shares are listed ‘ex’ dividend) will receive the final gross dividend of 66.65 cents. per share of Emira on Monday, September 13, 2021 and will still be entitled to receive consideration of the full offer of R9.15 per share of Emira in terms of the mandatory offer ”, they said.

Emira CEO Geoff Jennett previously told Moneyweb that the mandatory offer is not a takeover bid and that there are no plans to remove Emira from the list.

Jennett said other existing shareholder groups have indicated that they do not support the planned offer.

Former Emira CEO James Templeton, who is one of the directors of I Group, added at the time that Maitlantic has no plans to change the fund’s management.

I Group ‘likes to get involved’

I Group Director Paul Munday told Moneyweb on Tuesday that the justification for increasing its stake in Emira above the 35% threshold when the offer is not a takeover bid and there is no intention to remove Emira from the listing, is that I Group is not a passive investor and likes it. Get actively involved in your investments.

Munday said the logic is that if I Group plans to spend its time getting involved in its investments, “then the higher the percentage that we can own, the better if we see value at that price.”

He said I Group’s intention is to increase its stake in Emira when it sees value in price.


Munday said Emira is a critical investment that the group seeks to grow and build with Emira’s management team over the next decade.

“In R9.15, we believe that in a 10-15 year perspective it is not something that we are not going to be unhappy with, but at the same time we do not believe that there is a massive discount. [in share price to net asset value] there was when Covid-19 first hit.

“We believe that at this time it is more or less reasonable in value and that in the next period of time we can work with the [Emira] guys and generate some returns for ourselves, ”he said.

Read: Emira plans to increase its exposure to the US market

Munday said the R9.15 share offering for Emira is roughly 33% off the company’s net asset value (NAV), which “is not too out of line with the rest of the market.”

He said that if the Emira dividend is added, the offer price compared to the current share price is “roughly in the right stage” because Emira shareholders who accept the offer will get R9.82 per share and not R9, 15 per share.

Munday believes that some shareholders of Emira will accept the offer, but indicated that in terms of the acceptance percentage “your guess is as good as mine.”

“We think that some people will probably sell because, as we grow in percentage terms, the liquidity on the balance sheet [of shares] reduce, ”he said.

Munday admitted that I Group was lucky with the timing of its offer and the Covid-19 pandemic.

“It was a time when we had sold some other investments and the capital was ready to be deployed and the price was at a point where it was working.

“It was definitely a reunion and alignment of the stars, but was it something we would have done anyway? [despite Covid-19],” he said.

Analyst point of view

Naeem Tilly, Sesfikile Capital’s head of research, said Tuesday that it is unclear why Maitlantic decided to break the threshold required for a mandatory offering, but it likely wanted to increase its stake in Emira without any intention of acquiring the business or taking over. the control. .

Tilly said this is evidenced by some shareholders who do not support the transaction.

“Given that the offer price of 915 cents per share is an 8% discount on the current price, we would be surprised if the offer was accepted by any shareholder,” he said.

Emira shares rose 0.81% on Tuesday to close at R9.95.

When the tender offer was first announced in April this year, Emira’s share price rose 7% to close at R10.34, its highest level in more than a year.

Listen as Fifi Peters chats with Emira CEO Geoff Jennett (or read the transcript here):

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