SACTWU will get to own Gallagher Estates (and more) in R1.5bn HCI deal

Key topics:HCI restructures assets in a R1.5bn deal with SACTWUProperty portfolio swapped for HCI shares at R131 valuationTransaction boosts EPS and simplifies HCI’s capital structure.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter .Just when the tribe investors who follow our portfolios thought they could hang up their boots for the December break, Hosken Consolidated Investments (HCI) has dropped a hefty piece of reading material on the table. In a classic move of financial engineering that has become the hallmark of the investment holding company, HCI distributed a circular on Monday detailing a revised, multi-layered transaction with its anchor shareholder, the Southern African Clothing and Textile Workers' Union (SACTWU).For those who follow the intricacies of the JSE, this deal is a fascinating study in asset reshuffling and value unlocking. What started as an "Initial Proposed Transaction" back in July has morphed into a more complex beast, now dubbed the "Revised Proposed Transactions”..The Mechanics of the Deal.At its simplest level, this is an asset swap—but executed with the kind of complexity that requires a rapt attention, a mind map and a highlighter to comprehend fully.Here is the bottom line: HCI is effectively trading its hard property assets to SACTWU for HCI shares. It is a way for the company to buy back its own stock—always a sign of management confidence—while offloading non-core property holdings to the union, which likely has a different investment horizon and appetite for yield-bearing properties.The deal involves HCI selling three subsidiaries to SACTWU: Gallagher Estate Holdings (the massive Midrand convention centre), HCI Rand Daily Mail (which holds the property interests associated with the historic title), and Solly Sachs House. The price tag for this property portfolio is a shade under R550 million.But cash isn't simply changing hands in a straight line. The transaction involves a subsidiary called Squirewood Investments 64. SACTWU will subscribe for a 54.5% stake in Squirewood, and through a series of loan accounts and option agreements, this capital will eventually facilitate the repurchase of a massive chunk of HCI shares..The Magic Number: R131.00.For minority shareholders, the most critical number in the 100-page circular is R131.00. That is the strike price at which Squirewood is purchasing HCI shares from SACTWU, and the price set for the option agreement covering a further 16 million shares.When a company’s inner circle—and SACTWU is as inside as it gets at HCI—agrees to transact at a specific price, it sets a psychological floor for value. The deal sees Squirewood initially buying 1.1 million shares for R144.1 million, with the option agreement allowing for the further purchase of 16 million shares..Why do it?.This is classic "value unlock." HCI gets to reduce its issued share capital, which boosts earnings per share (EPS) for the remaining shareholders. It also streamlines the portfolio by moving specific property assets out of the listed entity and into the union, where they may be better suited as long-term income generators for pensioners.The "Cession Agreement" mentioned in the circular is the financial structure that enables this without massive cash flows disrupting the balance sheet. SACTWU’s obligation to pay for the properties is essentially offset against the proceeds it would receive from selling the HCI shares back to the company..Dates for the Diary.Shareholders need to pay attention to the calendar. The circular was distributed on Monday, 15 December 2025. If you want to have a say in this reshuffling, the General Meeting is scheduled for 10h00 on Thursday, 29 January 2026, at HCI’s offices in Sea Point.For those looking to vote, the "last day to trade" to be eligible is Tuesday, 13 January 2026.It is a complex end to the year, but one that signals that HCI remains active and aggressive in managing its capital structure. As always with HCI, it pays to read the fine print.

SACTWU will get to own Gallagher Estates (and more) in R1.5bn HCI deal

Key topics:

Related Stories