Atterbury’s bid to delist RMH is no sure thing 

RMB Holdings (RMH) could be nearing the end of its life as a listed entity. Or not. 

A recently released sens statement confirmed the near inevitability that Atterbury Property Fund (APF) will make an offer to buy out the RMH shareholders. Of course, nothing is certain yet. RMH has merely been notified by Atterbury of a “potential” offer. 

As the RMH board has pointed out “a non-binding expression of interest or offer has not been received”. 

It’s unusual for a company to release a cautionary announcement about a “potential offer”. The practice is to hold off until a “firm offer” has been made. But in this case the RMH board suspected that “confidentiality in respect of the offer has not been maintained” and so it wanted to level the playing fields by letting all shareholders know what’s going on. 

Yet given recent developments, it’s unlikely the news comes as any great surprise. The fact is that since late 2022 when RMH sold Atterbury Europe – at a bargain basement price – APF has been the obvious purchaser of what remained in RMH. The only uncertainty is the timing.

RMH’s board has been on a monetization strategy since mid-2020 when it unbundled its 35% stake in FirstRand. This left it with a chunk of property assets, the most valuable of which was Atterbury Europe. The next most valuable was a 38.5% stake in Atterbury. 

Any doubts that Atterbury was the most obvious buyer of RMH will have been put to rest in late October when the group emerged as the purchaser of a 28.35% block of RMH shares from Coronation Asset Management. There was no disclosure of the price at which the shares were exchanged but JSE data indicates it was done at 45c a share. 

Shortly after that trade the RMH board made an announcement that will have caused some anguish amongst minority shareholders who may feel they have not been well served by this board’s ‘monetisation’ strategy.   

To NAV or not to NAV

In it, the board said it was obliged to disclose that RMH’s net asset value was no longer the 66c/share carrying value revealed as of 30 September 2024, but somewhere between 42.3c and 52.7c a share.  

The board explained that management had performed an impairment assessment and “determined that the recoverable amount was lower than the carrying value, resulting in an impairment being recognised in accordance with IAS 36.” It added, rather strangely, “This impairment should not be interpreted as a reflection of the underlying operational performance of Atterbury.” 

To some shareholders this suggested the RMH board was signalling that a sale would only happen at between 42.3c a share and 52.7c, and not 66c as many might have expected. 

Whatever prompted the timing of this announcement it certainly didn’t go down well with shareholders who recalled the giveaway price at which Atterbury Europe had been sold off three years earlier. 

RMH CEO Brian Roberts told Currency he could not comment on any of the issues because the group is currently in a closed period. 

Shareholder activist Albie Cilliers, who has built up a 15% stake in RMH in a bid to ensure a more value-creating monetisation process, reckons the revaluation announcement coming just days after Atterbury acquired Coronation’s 28% stake was just a coincidence.  

But whatever the RMH board thinks about its own value, Cilliers is adamant the shares are worth a lot more than the revised NAV. “Atterbury was willing to pay 45c/share for a minority stake, if it wants control it will have to pay a significant premium on that,” says Cilliers. Control premiums usually run to as much as 30%, which would push the price close to 60c/share. 

Without Cilliers’ stake – and possibly a further 10% or so held by other activists – Atterbury may struggle to get enough support to delist the company. However, on offer of between 42c and 50c would probably be enough to get enough acceptances to push Atterbury’s holding above 50%. 

Judging by AGM attendance – an average of 53% – RMH’s shareholders seem a largely uninterested bunch. Many may not even be aware they are shareholders. They could easily be prodded by brokers to accept a low-ish bid. 

Having control while RMH is still listed would likely not suit Atterbury given the R35m-a-year it costs to remain public. But, given Cilliers’ determination not to be short-changed a second time, it’s difficult to see how a listing can be avoided unless the offer is close to 60c/share. 

_{Top image: Rawpixel/Currency collage.}