Rare hostile takeover deepens at BSE
Pauline Dikuelo - Mbongeni Mguni | Monday June 24, 2024 13:25
RDC, which has the largest investment property portfolio on the Botswana Stock Exchange at P6 billion, has spent several months engaging major unitholders on the possibility of making a partial offer directly to PrimeTime’s own unitholders.
As the two property firms are listed, they are obliged to make public announcements on the possible offer, a situation that has led to a series of cautionary statements by both sides to investors since February.
RDC, however, has not made a formal offer to PrimeTime’s unitholders, a development that would advance the hostile takeover and require PrimeTime’s board to review and make a recommendation to unitholders.
Prime Time chairman, Paul Masie, told Mmegi that RDC has been allowed to create uncertainty in the market over a prolonged period.
“Most stock exchanges only allow a certain window period for a potential bidder to make an offer on a company,” he said in response to Mmegi enquiries. “In this particular instance, RDC has been allowed to continue to create uncertainty in the market for almost 90 days as at time of writing, to the detriment of PrimeTime shareholders.”
As at Thursday, PrimeTime’s share price on the BSE was down eight percent for the year, placing the company as the local bourse’s fourth worst performer so far this year. RDC, meanwhile, is flat this year as it has not moved from P2.40 since January.
In the past five years, PrimeTime’s shares have shed about 45% in value, a drop that may have made them a target for a partial takeover. RDC Properties, meanwhile, has seen its shares rise by just over nine percent in the last five years.
PrimeTime’s price to earnings ratio, a measure of a share’s price relative to the company’s earnings, was at 3.86 on Thursday, compared to RDC’s 17.2, suggesting the former could be seen as undervalue and therefore the target of takeover hunters.
Masie said the board believed any hostile takeover bid from RDC would be value-destructive for PrimeTime unitholders.
“PrimeTime is aware of a document disseminated by RDC to some of the PrimeTime unitholders in this regards. “Based on the contents of the document, we believe that the hostile takeover bid will be value-destructive to PrimeTime unitholders especially minority holders,” he said.
The BPOPF, which is the country’s largest pension fund, held 38.8% of RDC Properties as at December, being the single largest shareholder. The pension fund also held nearly 33% of PrimeTime as at August last year, being the largest shareholder as well.
The pension fund and or its asset manager, is seen as being the driving force or kingmaker in the latest developments. The pension fund views property investments as stable sources of returns that can match the long term liabilities involved in the industry and a consolidation of assets may be a strategic move for greater control.