Shoprite shareholders clinch new deal in restructuring strategy

SOUTH AFRICA – Shoprite Holding’s shareholders have entered into a tripartite agreement with potential investors in a move that seeks to dilute Shoprite chairperson Christo Wiese’s voting rights.

The agreement with Thibault Square Financial Services and Titan Premier Investments will result in Wiese having 17.8% voting rights of Shoprite, down from 42.3%.

In February this year, Shoprite unveiled plans of buying back the deferred shares owned by Wiese who owns 305.6 million deferred shares in a bid to align the company with international best corporate governance practice.

Completion of the deal will see the voting interest of minority shareholders in Johannesburg Stock Exchange (JSE) listed retailer increase from 57.7% to 82.2%.

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Through the agreement, Thibault Square Financial Services and Titan Premier Investments, owned by Wiese, will see Titan receive 20 million new ordinary shares from Shoprite in exchange for deferred shares, reports Business Report.

“The proposed transaction will be implemented through the specific issue of 20 million new Shoprite Holdings ordinary shares to Titan in exchange for the agreement by Titan to acquire the Shoprite Holdings ordinary shares held by Thibault and causing the acquisition and cancellation of the deferred shares by Shoprite Holdings,” the group said.

Shoprite said that the cancellation of the deferred shares had added benefits for the group as it would remove uncertainty around a future sale of Thibault and a transfer of significant influence over Shoprite Holdings to a third party.

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

The deal will also see Wiese direct shareholding in Shoprite increase to 17.8%, up from 14.8%.

Shoprite said it was entitled to acquire 40.65 million deferred shares and the total consideration to be paid to acquire all the deferred shares adding that issuance of the consideration shares would result in an economic dilution to shareholders of 3.5%.

The board said that the proposed transaction would benefit its shareholders as it would simplify the company’s voting share structure and align the company with international best corporate governance practice.

“All shares in the company post implementation of the proposed transaction will have equal economic and voting rights,” the group added.

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“Together with being a simpler and more equitable shareholding structure, the post transaction single class of ordinary shares is believed to be more appealing to institutional investors and may, therefore, have a positive impact on the demand for the company’s shares,” the group said.

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