Shoprite investors move to cut Christo Wiese's stranglehold

By Sandile Mchunu Time of article published Jun 4, 2019

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Shoprite shareholders yesterday moved to dilute chairperson Christo Wiese’s influence in the group, cancelling consideration of a potential acquisition of all deferred shares in Africa’s largest food retailer.

The group said yesterday that more than 15 percent of shareholders had indicated that they were planning to vote against the plan.

Wiese’s deferred shares, held through his companies Thibault Square Financial Services and Titan Premier Investments, control about 32.2 percent of Shoprite’s voting rights.

The group has been in talks with Wiese since April about giving up his extra voting rights in a move to simplify the share structure. In exchange the billionaire would have received R3.3 billion worth of ordinary shares for his extra voting rights under the terms of the plan.

Shoprite said it had engaged extensively with its shareholders over two-thirds of its issued ordinary share capital, excluding shares held by Thibault and Titan.

The group said some shareholders indicated that they would not vote in favour of the special resolutions required to implement the proposed transaction, which was to be met by May 31. “This was in the interest of good corporate governance and goes beyond the requirements of the required regulatory special resolution,” Shoprite said. The group added that accordingly, the parties to the tripartite agreement relating to the April transaction between Shoprite Holdings, Thibault and Titan, entered into a cancellation agreement yesterday to terminate the transaction agreement with immediate effect.

Ron Klipin, a senior analyst at Cratos Asset Management, said the cancellation of the plan was good for corporate governance in the country, as it shows that corporate governance is effective and is getting better.

“It is good that institutional investors indicated that they would vote against the plan as it shows they are not letting Wiese get away with it as it would have been negative for shareholders,” Klipin said. “Wiese’s power has diminished and the plan was absolutely ridiculous.”

Shoprite shares rose nearly 1percent after the announcement of the cancellation of the plan. The stock inched up more than 0.76 percent after trading in a negative territory during the day before closing 0.96 percent higher R173.65.

Shoprite said the effect of the cancellation of the transaction agreement was that the proposed transaction will not be implemented. “The Shoprite Holdings’ board and management would like to thank shareholders for their ongoing input and regulators for their support. A circular together with a notice to convene a general meeting will therefore not be posted,” the group said.


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