Distell shareholders ratify Heineken offer

A R180 bird in the hand is better than two (which might only arrive next year) in the bush.
Investors will unfortunately be losing another nice share to play with. Image: Moneyweb

Distell shareholders voted overwhelmingly in favour of the offer by the international beer brewer Heineken to acquire control of Distell Group Holdings that will see one of SA’s biggest beverage producers delist from the JSE within six months.

Each of the resolutions to implement the transaction was ratified by 94% of shareholders attending the virtual special shareholders’ meeting or by voting by proxy.

Effectively, it was known right from the start that the meeting would purely put a rubber stamp on the deal.

Distell’s majority shareholder – Remgro, owning nearly 56% of the shares – gave an irrevocable undertaking to vote in favour of the scheme resolutions.

Page 62 of the Combined Circular to Distell Shareholders states: “Distell has received an irrevocable undertaking from Remgro Beverages to vote in favour of inter alia the scheme resolution, with Remgro Beverages holding 55.93% of the exercisable voting rights in Distell.”

Distell management voiced its support when Heineken BV tabled its offer of R180 per share, valuing Distell at close to R40 billion. Shareholders are offered cash or the option to keep shares in the unlisted companies that will result from the deal. They can also take part cash and part shares.

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Richard Rushton, chief executive officer of Distell, said at the time of the announcement of the offer that the transaction marks a major milestone for Distell.

“The offer is testament to the strength of Distell’s leading position in South Africa and growth in select African markets, alongside the value of our brands and people providing the potential to immediately unlock significant value for our shareholders. Together, this partnership has the potential to leverage the strength of Heineken’s global footprint with our leading brands to create a formidable, diverse beverage company for Africa.

“We will have a stronger route-to-market capabilities with a unique multi-category portfolio, furthering our sustainable growth trajectory and ability to compete on scale,” said Rushton.

Ninety One

Asset manager Ninety One announced its displeasure with the deal on the eve of the special scheme meeting and its intention to vote against the resolutions, with the knowledge that it won’t make a difference.

However, its public opposition still serves a purpose, as is the case in similar situations when shareholders voice their opinions on issues ranging from executive remuneration to company transactions.

Ninety One raised valid points.

It noted that the big Heineken might be the weaker spouse in this marriage and that the transaction values Distell lower than its peers on a price/earnings ratio.

This got another well-known asset manager, Chris Logan, founder and chief investment officer at Opportune Investments, asking a few questions at the meeting.

Rushton replied that Distell did engage with Ninety One, but believed that Distell had used proven methods in valuing Distell.

Eventually, money talks.

While Distell had a very good run on the stock exchange lately and its prospects look good, shareholders obviously decided that R180 today is better than waiting a few years for a bit more.

Unfortunately, investors lose another nice share to play with – the days of stock prices taking a whole page in the newspaper are becoming dim memories.

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