While analysts differ on what the outcome of talks between Rebosis and Delta could be‚ the most likely scenario is that Rebosis will win Ascension's assets‚ as it in effect already controls the management company.
But some believe there could well be a three-way merger between Rebosis‚ Ascension and Delta‚ as they are all substantially black-owned and managed and all have exposure to government-tenanted offices.
It emerged last week that Rebosis's chief executive Sisa Ngebulana and Delta's chief executive Sandile Nomvete both believed they were entering into an exclusive agreement with Ascension co-founder and executive director Shaun Rai to buy its management company. But they had seemingly been two-timed‚ with the two chief executives unknowingly bidding against each other.
However‚ Rebosis's higher offer of R150m - about 42% more than Delta was prepared to pay - is the legally binding deal.
That has placed Delta in a precarious position as it has already concluded agreements with various shareholders to acquire a 17.75% stake in Ascension in the run-up to what it believed would be a full merger.
Rebosis has simultaneously acquired a 15.96% interest in Ascension with the same understanding.
Ngebulana said that Rebosis and Delta had decided to work together to find an "amicable solution" to what analysts feared could be a costly battle for control of Ascension's assets.
"The situation is unfortunate but we have agreed that it is in no one's interest if the takeover of Ascension turns hostile. It will just be a waste of shareholders' money‚" Ngebulana said.
He conceded that one possible solution could be for Rebosis to buy Delta's stake in Ascension.
Meanwhile‚ it seems unlikely that Rai will have a role to play if Rebosis takes over Ascension. Asked about initial talk that he could take up a position on Rebosis's board‚ Ngebulana said Rai was "out of the picture".
Though Rebosis is likely to end up with control of Ascension's assets‚ analysts are concerned about the effect a merger could have on the company's earnings.
Sesfikile Capital director Mohamed Kalla said he was generally in favour of consolidation among the sector's smaller companies but that a Rebosis-Ascension merger no longer looked attractive given the eventual cost of the deal.
"Ascension's management company has an effective market value of R65m based on current earnings‚ so at R150m we believe that Rebosis overpaid‚" Kalla said. "And if Delta agrees to sell its stake in Ascension‚ Rebosis will likely have to fork out yet another premium."
Kalla said that given Rebosis's current cost of capital‚ the deal would more than likely be dilutionary for shareholders. He said not everyone necessarily wanted Rebosis to increase its exposure to the government-tenanted office sector.
He said there was a view that Rebosis should retain its focus on the retail property market‚ as it already owned a portfolio of high-quality shopping centres including Hemingways Mall in East London and Sunnypark in Pretoria.
"We do not believe that the Ascension portfolio matches the quality of the Rebosis government portfolio," Kalla said.
Catalyst Fund Managers investment manager Paul Duncan said that while a Rebosis-Ascension merger was a likely scenario‚ it was not necessarily a done deal.
He believed another possible outcome was a three-way merger between Rebosis‚ Ascension and Delta‚ which would create a mega-fund with assets exceeding R10bn.
He said such a move would enhance liquidity and economies of scale‚ but was not necessarily ideal as his firm preferred focused‚ specialised funds to large diversified ones.
"We also don't like external management companies and apply a risk premium to the hurdle rate of companies that have them. The current situation once again highlights the conflict between what is best for shareholders of the fund and what is best for shareholders of the management company," Duncan added.
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