Cape Town - Pick n Pay Stores announced on Tuesday that it was seeking shareholder approval for a proposal to replace its current pyramid ownership structure, which was introduced in 1981 by the Ackerman family to prevent a hostile takeover.
The company said in a statement that it seeks to replace the structure, which “ensures that the founding values of the business remain in place through family control of the company”, with a simpler, more modern single share listing.
The pyramid takes the form of a dual listing on the JSE. The Ackerman family owns more than 50 percent of Pick n Pay Holdings, which in turns owns more than 50 percent of Pick n Pay Stores.
The proposal, which has been approved by both boards, would be put to a shareholder vote on July 25.
It would collapse the pyramid by unbundling all shares in Pick n Pay Holdings with shareholders receiving shares in Pick n Pay Stores on a pro rata basis. Pick n Pay Holdings would delist from the JSE, and would be wound up.
The Ackerman family would be allocated a new class of unlisted voting shares in Pick n Pay Stores, which would ensure that the family continued to have a controlling interest in the company.
Pick n Pay chairman Gareth Ackerman said the proposed new structure was recognised domestically and internationally and was “more appropriate in ensuring compliance with modern corporate governance standards”.
“Unbundling the pyramid will streamline the Pick n Pay Group into one listed entity, with benefits for the company and potentially for all shareholders. Over time, the simpler structure should improve Pick n Pay Stores’ appeal to investors, which could in turn help our long-term growth strategy.
“We are delighted with the leadership shown by Richard Brasher and his team, and their commitment to the founding values of the company. This new structure will ensure stability, limit uncertainty and allow our excellent management team to get on with the vital job of completing the turnaround of the business,” Ackerman said.
Brasher, Pick n Pay’s chief executive, said he saw this move as “the next step in our modernisation programme”.
“It will increase the free float in Stores from about 46 percent to around 73 percent. This should over time make the company more attractive to investors. By unbundling Holdings shares into Stores, it will also eliminate the current discount between the two shares.
“Importantly, it will remove a lot of distraction and debate about the current structure and when it will be changed. This will enable me and my team to put our entire focus into serving our customers, improving our offer and accelerating the performance of the company,” he added.
Pick n Pay’s founder, Raymond Ackerman, added that the family intended to stay invested and involved in the company.
“We have a highly effective team managing the company, and our continuing involvement will ensure consistency in the company’s direction and continuity in our values,” he said.
ANA