If the merger of Madison with Redefine and ApexHi succeeds, the new, enlarged Redefine will be an internally managed business. The external contract with Madison with fall away and the Madison employees will work directly for Redefine.

Investors have not been strong supporters of Madison as a standalone business. Its yield of 12,5% is the highest in the sector, while Hyprop, at 7,2%, now has a lower yield than Liberty International’s 8,5%.

The market is factoring in a high risk of Madison losing the Hyprop management contract, and with it R34m in management fees.

The contract is up for renewal in December 2009: whether to continue will be up to the Hyprop board.

Madison executive director Wolf Cesman says Hyprop could function day to day without Madison.

“But what they wouldn’t have is the dealmaking ability of my colleague Marc Wainer. If you could clone Marc, then there would be no need for external management.

“We arranged for Hyprop to acquire its most important assets such as Canal Walk in Cape Town, the Mall of Rosebank and the Glen in southern Jo’burg.”

First prize for Cesman would still be for Madison/Redefine to take over Hyprop one day, but he recognises that the shareholders want the niche shopping centre company to stay on the JSE in its present form.

The most likely outcome is that Madison will continue to work with Hyprop but at a lower fee. In effect it might be turned from a management to a consulting contract.