Hyprop Investments withdraws bid for MAS amid governance concerns

 Hyprop Investments has withdrawn its bid for JSE-listed MAS because the central and eastern Europe property group, along with its major shareholder PK Investments, has refused to provide documents about a disputed development joint venture (DJV) agreement.

A number of South African institutional minority shareholders, collectively holding about 15% of MAS shares, recently raised concerns regarding MAS's corporate governance, historical disclosure, and potential conflicts of interest among board members. They wanted two members of MAS’s board to step down and proposed the addition of four independent directors.

Hyprop, with its share-for-share or optional cash bid, was one of two potential suitors for MAS, the other being PK Investments, MAS’s biggest shareholder at present and the other party in the DJV.

Hyprop stated on Friday that the refusal by the Hyprop board and PK Investments to release the documents is “inexplicable,” considering the dispute is already public. It is “common cause that the DJV is at the centre of the challenges currently faced by MAS and the dissatisfaction of its South African institutional shareholders.”

Hyprop indicated that it was for this reason that a condition of Hyprop’s bid was that MAS provide it with access to the DJV agreements to allow Hyprop “to assess the risks to MAS and Hyprop and to provide equal access and fair treatment to both Hyprop and Prime Kapital (a related party to MAS, insider and competing bidder.”

“The MAS board has refused to make the DJV agreements available without the consent of Prime Kapital, which Prime Kapital has refused. MAS did not provide Hyprop with any reasons for the refusal by Prime Kapital,” Hyprop’s directors said.

“For that reason, despite considerable support among MAS shareholders for Hyprop's Voluntary Bid and Hyprop's ability and desire to create value for all MAS shareholders, Hyprop hereby gives notice that the Hyprop Voluntary Bid has been terminated as one of its non-negotiable conditions will apparently not be fulfilled,” they said.

Meanwhile, media reports on Thursday indicated that PK Investments has confirmed it is close to securing more than double the previously announced R2.2 billion allocated to fund its voluntary offer for MAS. Its offer also includes listed preference shares.

The DJV was established in 2016 to co-develop and invest in real estate projects in central and eastern Europe, combining MAS’s capital with PK’s development expertise. The DJV is 60% owned by PK and 40% by MAS. A key element of the dispute between MAS and PK has been the valuation of PK’s 60% stake, following MAS’s wish to buy this stake and exit the DJV ten years earlier than planned.

Hyprop’s share price fell 2.83% to R21.60 on Friday morning; a year previously, it was trading at R17.81.

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