South Africa’s Shoprite eyes share buyback from chairperson Christo Wiese

SOUTH AFRICA – Shoprite Holdings, a leading South African retailer, has unveiled plans of repurchasing its shares form the group’s chairperson, Christo Wiese, as it seeks to enhance transparency among its shareholders.

Shoprite said that it has entered into an exclusive in-principle discussions with its chairperson Christo Wiese to purchase his deferred shares, reports Business Report.

According to Pieter Engelbrecht, Shoprite’s chief executive, the negotiations were spearheaded by shareholders who also wanted to dilute Wiese’s influence in the retailer.

“We have started the discussions, but it is the shareholders’ decision and we had to inform the market because the discussions are already taking place,” Engelbrecht said.

Christo Wiese’s deferred shares carry about 32.3% of the voting rights of Shoprite Holdings and are held through Thibault Square Financial Services.

Shoprite said that the move will also simplify the firm’s voting share structure as well as align the company with international best corporate governance practice.

According to industrial experts, the plans will also allow the retailer to forge a separate and transparent identity away from Wiese, who took heavy losses after the near collapse of international furniture retailer – Steinhoff.

Additionally, senior analysts at Cratos Capital, Ron Klipin, said that the acquisition of the Christo’s deferred shares presents an opportunity for the retailer to become a more transparent business.

“The higher voting structures are being phased out as evidenced by the collapse of the Pick n Pay structure.

The funding of this buyback still needs to be finalised and the group needs to keep a growing debt under control in a very difficult operating environment,” Klipin said.

Shoprite’s capital structure currently consists of two share classes: Shoprite Holdings ordinary shares and Shoprite Holdings deferred shares.

Shoprite Holdings currently controls a 6.21% stake in its business while Public Investment Corporation (SOC) Ltd holds 12%.

Other major shareholders in the firm include; Oppenheimer Funds, Inc., T. Rowe Price International Ltd., The Vanguard Group Inc., Lazard Asset Management LLC. and GIC Pte Ltd

During the release of its half year results, the company said it has been experiencing a sluggish growth and food deflation at its home market of South Africa which is projected to implicate its full year results.

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