Property play reads like a movie script Students will study this for one for many years … Hyprop is swooping in like a white knight to pick up the pieces in MAS plc mess. There is a lot of money to be made. MAS plc is a JSE-listed largely Romanian retail property company which is doing very well on the ground. But recent corporate actions have seen the market lose confidence in management and the board and as a result this company is trading at R19 against a net asset value approaching R40 per share. 30%-odd shareholder Martin Slabbert is perceived to be calling the shots and the market does not like his actions. His recent lowball bid for the company was badly received and subsequently withdrawn. In its current guise the share is not going anywhere. Enter Hyprop and CEO Morne Wilken, who used to run MAS plc. He understands MAS, the business, the people and the politics. Hyprop is a R16bn SA listed property business specialising in retail malls. They announced yesterday that they intend making an offer for MAS shares, which caught the market by surprise. They didn’t give actual numbers and this will follow … we wait with bated breath and they will currently be canvassing shareholders for views. MAS has a market cap of around R12bn and a net asset value relatively close to that of Hyprop, give or take a few billion. So this is a big deal for both companies. The investor conundrum is how to play the situation. MAS as it stands is worth a lot more than R30, but is unlikely to rerate any time soon given its current issues. Hyprop is likely to follow with an offer and the pricing will obviously be key. They can probably get away with a cheeky price (say R22), taking advantage of the MAS impasse. Investors might be tempted to accept Hyprop shares at that level as they retain their MAS exposure and it would probably rerate materially. It would be a great economic transaction for Hyprop well into the R20’s. But Hyprop would probably have a condition that wanted a certain percentage (50%?). That would enable them to control the board and regain the confidence of the market. So MAS has high risk and reward and if a deal does not materialise, you are back to where you were. If Hyrop gets an offer through, investors could accept that or hold on for a much higher share price post a deal. But …. The complexity is enough shareholders have to accept to get the deal done. If you own a Hyprop share right now, you have a solid business that is around fairly priced. If they could get 50% of MAS at R22 this would be a transformative deal which would be hugely accretive - adding around a third to the value of a Hyprop share over 12 months. That’s around a R55 price target. So Hyprop does not have the same upside as MAS, but it’s a lower risk bet, as if a deal does not go through you are back to where you were, and that’s a better place than MAS right now. Your move, Morne.