Johannesburg - After years of speculation, the family-owned and run Dis-Chem Pharmacies, South Africa’s second-biggest retail chain of chemists by number of stores, confirmed on Monday its intention to list on the JSE’s main board.
As a result of the move, Dis-Chem’s existing founder shareholder, the Saltzman Family Trust and management will dispose of a portion of their investment. In a statement, Dis-Chem said the existing shareholders would remain “materially” invested in the company.
The listing would enhance Dis-Chem’s public profile and general awareness and enable the group to access capital markets. Speculation about the company’s listing has been circulating for at least seven years. The mooted listing will take place against the backdrop of constrained consumer spending.
The company, which plans to list in the food and drug retailers sector of the JSE, was founded by husband and wife Ivan and Lynette Saltzman in 1978. The pair opened their first pharmacy in Mondeor, south of Johannesburg.
Dis-Chem co-founder and chief executive Ivan Saltzman said yesterday that the company’s decision to list on the JSE was the next phase of its growth story. The discount pharmacy chain wants to be South Africa’s leading retail pharmacy.
Consistent
The listing is consistent with the company’s aggressive growth plans. It wants to double its store footprint in the next five to eight years by pursuing store roll-out opportunities and converting independent pharmacies to the Dis-Chem brand.
“The company’s strategy remains to identify attractive locations for new pharmacies, as well as convert independent pharmacies in attractive script markets,” Dis-Chem said.
“A listing will support our growth and allow us to better service our customers and other stakeholders. It also facilitates a partial exit while allowing existing shareholders and key management to remain materially invested, ensuring strong alignment between management, existing and new shareholders.
“Lynette and I will continue to be financially and emotionally committed to the business and we will continue to lead Dis-Chem as chief executive and managing director respectively.”
The Saltzman Family Trust currently owns 66.9 percent of the company. The listing is likely to see the family loosen the grip on the company.
“Dis-Chem will bring to public equity investors the opportunity to invest in a winning retail business model that is well positioned to benefit from strong fundamental sector and company growth drivers,” chairman Larry Nestadt said.
Dis-Chem has tripled its store base to 103 in South Africa and Namibia since 2008.
The JSE-listed Clicks Group has the largest retail pharmacy chain with more than 360 in-store pharmacies.
For the year to February 28, Dis-Chem’s revenue was R15.5 billion and had earnings before interest, tax, depreciation and amortisation of R1.1bn. For the six months to August 31, Dis-Chem’s revenue was R8.7bn.
Its listing will entail an offer for subscription of new ordinary shares. Net proceeds will be used, among others, to repurchase shares from Dis-Chem’s existing shareholders and to reduce debt.
The company declined to comment further on the planned listing and said a detailed pre-listing statement would be issued before the end of this month.
Dis-Chem has appointed Goldman Sachs International, Investec Bank and Standard Bank as joint co-ordinators and book runners.
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