A committee of the Botswana Stock Exchange (BSE) has launched an investigation into RDC Properties’ attempted hostile takeover of PrimeTime, with a report due to be released in 30 days.
In the meantime, the offer circular that RDC was scheduled to publish to PrimeTime’s shareholders, has been put on hold, effectively freezing the proposed offer, at least until the BSE makes a decision.
The latest developments are perhaps the most exciting in recent times in the local capital market, which usually ticks along quietly, transactions dominated by the large pension funds and facilitated by asset managers whose employees are on a first-name basis in the small market.
The stakes are high as the two companies are major players in both the property market and on the BSE. RDC has the largest investment property portfolio on the BSE at about P6 billion, located in seven countries, with 26% in Botswana. PrimeTime, meanwhile, has assets of more than P1.7 billion, with 63% of the portfolio in Botswana. The two firms own landmark assets such as Masa Centre, Lobatse Junction, Pilane Mall and others.
RDC’s portfolio is dominated by retail and hospitality assets, whilst PrimeTime’s assets are predominantly office and retail. Both groups have a lower exposure to industrial assets.
Bared teeth
According to a leading online financial dictionary, Investopedia, by definition a hostile takeover occurs when an acquiring company attempts to take over a target company against the wishes of the target company’s management.
An acquiring company can achieve a hostile takeover by going directly to the target company’s shareholders or fighting to replace its management. Since at least February, RDC has been making moves to pitch a takeover directly to PrimeTime’s shareholders, a move that the latter’s board has thus far poured water on.
From an initial desire for 50+1% equity in PrimeTime, RDC is seeking to snap up at least 44% equity in PrimeTime by offering unitholders (shareholders) 0.6875 RDC units for each PrimeTime unit they hold.
After months of speculation, with the suspense and passive-aggressive hostilities contributing to an eight percent drop in PrimeTime’s share price, RDC was finally ready to email its formal offer to PrimeTime unitholders on September 20.
On September 19, however, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) stepped in and froze the process which, according to RDC, was for “reasons unknown”. The BSE, RDC directors said, had approved the offer circular which was due for emailing.
NBFIRA’s actions were reportedly spurred by a complaint filed by PrimeTime, whose directors are unhappy about the method taken by RDC, the impact on share prices and the reasons being advanced for the takeover.
The BSE’s investigation is being read as a response to NBFIRA’s interventions in the matter. The stock exchange is regulated by NBFIRA.
Parry and riposte
Because both RDC and PrimeTime are listed, the takeover has played out in the public sphere, but also because they are both listed, directors are constrained in how far and when they can comment on matters.
