According to documents shared with investors via the Botswana Stock Exchange (BSE), RDC recently revised the initial offer it tentatively put to PrimeTime unitholders in late June. Now, in the formal offer, known as a Firm Intention Announcement and officially submitted on August 21, RDC is seeking to snap up at least 44% equity in PrimeTime by making an offer directly to unitholders.
RDC is offering PrimeTime investors who take up the offer, 0.6875 RDC units for each PrimeTime unit they hold.
In the original tentative offer from late June, RDC was looking at securing 50+1% equity holding in PrimeTime, also on the basis of 0.6875 RDC units for each PrimeTime unit, but with an additional round of bonus units for those PrimeTime investors who agreed to the takeover.
A moment of truth has descended on the highly contested deal, as PrimeTime prepares an official response developed by an independent board, guided by an independent expert.
PrimeTime has already set up the independent board which comprises industry veterans, Paul Masie, Nigel Dixon-Warren, Max Marinelli, and Inutu Zaloumis.
RDC’s offer will be open to PrimeTime investors for 30 days after it issues a circular to investors, but the former will also be busy during the moment of truth, as it has to convene an Extraordinary General Meeting to approve the issue of new units to be offered to those PrimeTime investors who take up the deal.
RDC is the BSE’s largest property firm in terms of assets, with a portfolio valued at more than P6 billion spread across Botswana, South Africa, Madagascar, Mozambique, Zambia, Croatia, and the United States of America. About 75% of the portfolio is located outside Botswana.
PrimeTime, meanwhile, has assets of nearly P2 billion and is a dominant local player, particularly in the retail property space. PrimeTime also has assets in South Africa and Zambia.
Ahead of the opening of the offer and decisions by PrimeTime investors, figures made public by PrimeTime pour cold water on the proposed deal. According to PrimeTime’s calculations, as shared publicly recently, a snapshot simulation showing the theoretical impact of RDC’s takeover suggests that the deal could drop basic earnings per share by up to 23% and net asset value per unit by up to 28.5%.
In addition, an independent research report on the initial tentative RDC offer, commissioned by PrimeTime recently, concluded that the transaction did not offer “compelling value to PrimeTime holders, the investing public in Botswana nor the commercial competitive property market in Botswana”.
“The proposed transaction appears to be one-sided in the benefits that it will provide primarily to RDC unitholders,” the report from Golden Capital reads. “Most of RDC’s corporate metrics will be improved by the transaction, while those of PrimeTime holders will be negatively impacted.”
Experts following the transaction told BusinessWeek that PrimeTime had come into the gunsights of bargain hunters due to trading at a heavy discount for several years.
“PrimeTime is quite undervalued at the moment, which is a function of the market. “You have a high ownership in it by the Botswana Public Officers Pension Fund which holds units and does not trade them. “Quite often, things get skewed and you look at the price over the past few years, it has been worse than during COVID. “That has led to the whole attempt to get a hold of PrimeTime and from RDC’s point of view, it’s a great deal that makes sense if they can get away with the price,” one analyst said.
