Fountainhead Property Trust, a South African real estate company, declined the most in more than six months after larger rival Growthpoint Properties Ltd. abandoned a takeover attempt.
The shares fell as much as 7.5 percent, the most since November 19, and were down 6.1 percent to 8.39 rand at the close of trading in Johannesburg, giving the company a market value of 9.8 billion rand.
Growthpoint, the country’s biggest property company by market value, said today it is withdrawing an all-share offer to acquire Fountainhead first tabled in October. Redefine Properties Ltd., the country’s second-largest real estate company, subsequently built a 46 percent stake in Fountainhead, effectively blocking the Growthpoint bid.
“The decline is related to Growthpoint withdrawing its offer,” Leon Allison, property equity analyst at Macquarie First South Securities, said in a phone interview from Johannesburg. “Some Fountainhead shareholders might be disappointed the deal didn’t go through.”
Investors in Fountainhead “have been denied the opportunity to consider and vote on the Growthpoint Offer, which would have entailed a premium of 1.13 billion rand ($110 million) at the May 28 closing price,” Growthpoint said in the statement.
“They had nowhere to go with the bid,” Redefine’s Chief Executive Officer Marc Wainer said in a phone interview today. “They should have withdrawn the bid weeks ago.”
Growthpoint shares traded 4.1 percent lower at 25.75 rand, while the 19-member FTSE/JSE Africa Real Estate Investment Services Sector Index fell 4 percent.
Growthpoint’s withdrawal brings “more certainty” regarding the companies involved in the three-way battle, Macquarie’s Allison said. “That’s good from an investor’s point of view.”