South African grocer Shoprite is to buy back deferred shares held by its chairman Christo Wiese to simplify its voting structure but substantially curbing Wiese’s influence in the company he helped turn into an African powerhouse.
Besides ordinary shares, Shoprite’s capital structure includes deferred shares which carry about 32.3% of the voting rights at Shoprite. The deferred shares are held by Weise’s investment vehicle, Thibault Square Financial Services Proprietary.
Under the deal, Titan – another one of Wiese’s entities – will receive 20 million new ordinary shares from Shoprite, in exchange for deferred shares which Shoprite will buy for R265 000 ($18 836.41) and cancel, the retailer said in a statement.
The proposed deal will see Wiese’s voting interest reduced to 17.8% from 42.3%, while his direct shareholding will increase to 17.8% from 14.8%, Shoprite said.
Following the issuance of the new shares, the total voting interest of minority shareholders will increase from nearly 60% to more than 80%, while their shareholding will be diluted by 3.5%, it added.
Wiese has been instrumental in Shoprite’s transformation from just six outlets in South Africa in the 1970s to 2 800 shops across Africa, dwarfing rivals including Walmart Inc’s South African unit Massmart.
Shoprite, which also sells furniture and medicine, said the deal is expected to result in a potential once-off reduction in earnings and headline earnings of R3.3 billion, based on a 30-day-volume-weighted-average price of R165.35 per share as at April 17.