Johannesburg - South Africa's Pick n Pay Stores will make changes to its ownership structure to increase its free float in a bid to boost demand for its stock, the supermarkets operator said on Tuesday, sending its holding company's shares to record highs.
Shares in Pick n Pay Holdings, which holds a controlling stake, hit an all-time high of R33 and were trading up 12 percent at R31.95 by 1005 GMT. Pick n Pay Stores fell 2 percent to R68.50.
A “pyramid structure”, wherein the founding Ackerman family own a controlling stake in the holding company which itself owns a majority stake in Pick n Pay Stores, was introduced in 1981 to prevent a hostile takeover but is now seen as outdated, the company said in a statement.
The holding company will spin off its 52.7 percent stake, or 257 million shares, and will instead be issued unlisted voting shares which will allow the founding Ackerman family to retain their controlling stake in the stores.
Read also: PnP ownership structure to change?
“Over time, the simpler structure should improve Pick n Pay Stores' appeal to investors, which could in turn help our long-term growth strategy,” chairman Gareth Ackerman said.
The spin-off will increase the free-float to 73 percent from 46 percent and will appeal to international and local investors, making capital more accessible, CEO Richard Brasher said.
The holdings company will be de-listed and wound up should shareholders approve the unbundling on July 25.
Pick n Pay said shares would not be diluted by the action. Pick n Pay was founded in 1967 in Cape Town.
REUTERS