Shoprite on buyout price

JOHANNESBURG – Shares in Africa’s biggest supermarket group, Shoprite, slid as much as eight per cent yesterday after the company said it had accepted a lower-than-expected 13,2 billion rand private equity buyout.

Investors said the 26 rand per share offer was disappointing, and dumped the stock, which had risen to an all-time high of 28 rand before the announcement late on Friday. “I am incredibly unhappy with the deal in its entirety,” said portfolio manager Delphine Govender at investment management firm Allan Gray, whose clients own 25,5 per cent of Shoprite.Allan Gray advises its clients, who vote independently.But analysts say that despite opposition from some shareholders, the deal would probably get the go-ahead since it has the backing of Shoprite Chairman Christo Wiese, Old Mutual, and fund manager the Public Investment Corporation, which together own a sizeable chunk of the voting rights.The company said late on Friday Brait Private Equity had agreed to pay 26 rand per share for Shoprite under a complex buyout offer, which would be the biggest such deal in South Africa and comes as foreign private equity firms step up their activity in the country.The PIC, which manages more than 400 billion rand in government pension funds and owns almost nine per cent of Shoprite, has backed the deal.PIC CEO Brian Molefe told Reuters the takeover presented an opportunity to restructure Shoprite, through both management and board changes as well as introducing a black economic empowerment deal and an employee shareholder scheme.”The people that are buying the shares, Brait and the other shareholders, told us that they will restructure the group,” Molefe said.Molefe has previously used his leverage as a major shareholder to push companies into meeting government targets on black ownership, management and procurement under its black economic empowerment affirmative action drive.Nampa-Reuters”I am incredibly unhappy with the deal in its entirety,” said portfolio manager Delphine Govender at investment management firm Allan Gray, whose clients own 25,5 per cent of Shoprite.Allan Gray advises its clients, who vote independently.But analysts say that despite opposition from some shareholders, the deal would probably get the go-ahead since it has the backing of Shoprite Chairman Christo Wiese, Old Mutual, and fund manager the Public Investment Corporation, which together own a sizeable chunk of the voting rights.The company said late on Friday Brait Private Equity had agreed to pay 26 rand per share for Shoprite under a complex buyout offer, which would be the biggest such deal in South Africa and comes as foreign private equity firms step up their activity in the country.The PIC, which manages more than 400 billion rand in government pension funds and owns almost nine per cent of Shoprite, has backed the deal.PIC CEO Brian Molefe told Reuters the takeover presented an opportunity to restructure Shoprite, through both management and board changes as well as introducing a black economic empowerment deal and an employee shareholder scheme.”The people that are buying the shares, Brait and the other shareholders, told us that they will restructure the group,” Molefe said.Molefe has previously used his leverage as a major shareholder to push companies into meeting government targets on black ownership, management and procurement under its black economic empowerment affirmative action drive.Nampa-Reuters