HARARE- At an EGM held virtually on Monday, Dawn Properties' shareholders approved a proposed acquisition of the company’s total issued share capital, by African Sun.

Hotelier African Sun, which shares a legacy history with Dawn, having at one time been a single entity before unbundling, proposed to acquire 100% of Dawn’s issued share capital by means of a share swap.

The tabled resolution entailed issuance of 6161,128,718 new African Sun ordinary shares to existing Dawn shareholders at a swap ration of 1 African Sun ordinary share for every 3.99 Dawn shares held.

This swap implies that the market value of African Sun before the acquisition would be estimated at 4 times that of Dawn Properties. Minority shareholders had prior to raised concerns over the valuation given that the Net Asset Value of Dawn was ahead that African Sun.

The Securities Exchange Commission also quipped into the matter and highlighted that it was consulting ZSE and the companies’ advisors with a view to ensure that Dawn Properties’ minority shareholders are not prejudiced. The regulator also pointed that the offer price for Dawn shares was significantly below the then prevailing average market price.

 Arguing in favour of the transaction at the EGM, Lloyd Mhishi, a director with the company, said the 2 entities are reversing the 2003 unbundling because the demerger has failed with respect to achieving increased efficiency and the goal of attracting debt financing.  

“Dawn’s portfolio continuously performed below expectation with its yields averaging below 3% and African Sun on the other hand has struggled to raise affordable debt financing required to refurbish the hotels to enhance its revenue generation capacity”

According to a prospectus released earlier the deal is expected to result in significant cost savings and improved liquidity to investors in both companies.

African Sun shares rose by 14.63% after the proposed offer was approved.

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