Shoprite Checkers establishes US$599m evergreen B-BBEE employee trust

SOUTH AFRICA – JSE-listed retailer Shoprite Holdings, through its subsidiary Shoprite Checkers Propriety Limited, has formed an Employee Trust with 40 million Shoprite Checkers’ shares valued at R8.9 billion (US$599m).

The supermarket chain owner through the newly formed trust has effectively increased black empowerment ownership in the subsidiary to 19.2%.

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The trust’s 40 million shares will be split into 4 million class A shares and 36 million class B shares.

According to the company, its South African employees currently totalling 126,000, will benefit directly through the Shoprite Employee Trust, as unitholders, whilst non-RSA employees, of which there are currently 16,000, will receive equivalent benefits through their respective payroll. 

“The transaction is in line with the Shoprite Group’s core values of recognising the valued role its employees play in the growth and success of the Shoprite Group,” stated Shoprite.

The Shoprite Employee Trust has been established on a non-vesting, evergreen basis which will be primarily facilitated by Shoprite Checkers on a notional basis.

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This is aimed to create a long-term B-BBEE shareholder in Shoprite Checkers, for the benefit of the Shoprite Group’s employees.

As part of the payment plan, dividend entitlements are linked to a Shoprite Holdings dividend per share to ensure that the benefits which flow to employees are transparent and that employees recognise the tangible benefits of the Shoprite Group continuing to achieve strong operational and financial results.

Furthermore, the improvement of employees’ lives is an imperative, especially in the economic context of the countries in which the Shoprite Group operates.

Shoprite Checkers will provide a R888 million contribution which will allow for the subscription of 10% of the shares to be held by the Shoprite Employee Trust with the balance of shares funded on a notional basis by Shoprite Checkers.

An initial distribution of R77 million (US$4.84m) for the 6-month period to 2 January 2022 will be received by eligible RSA and non-RSA employees.

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The Shoprite Group anticipates the impact of the transaction on its headline earnings to be a reduction in the region of 2.7%.

This is based on the initial distribution to be paid relative to the Shoprite Group’s headline earnings from continuing operations for the 6-month period to 2 January 2022. However, this transaction will not have an impact on the shares in issue in Shoprite Holdings.

“The transaction is intended to retain, motivate and incentivise the employees of the Shoprite Group to continue to contribute towards its success going forward.

“It represents a material step that has been taken in strengthening the relationship between the Shoprite Group and its employees for the benefit of the Shoprite Group,” highlighted Shoprite.

Other companies in the rainbow nation such as Coca-Cola Beverages South Africa, South African Breweries and PepsiCo SA have also offered employees a slice of the companies’ shares through establishment of Ikageng Employee Share Trust, SAB Zenzele Kabili and Bašumi Trust respectively.

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