Christo Wiese is letting go of control of Shoprite, his largest investment, but in return could get a windfall of more than R3bn.
The retailer on Thursday gave further details of a deal to buy back the shares that have enabled the billionaire to call the shots for decades. And for his trouble, the 77-year-old tycoon will get 20-million new ordinary shares if the deal goes through.
Wiese, through his Titan Group, will emerge with a bigger economic stake in the nation's largest retailer, but with much less voting power.
"The voting interest of the Titan Group will decrease from [about] 42.3% to [about] 17.8% and its economic interest will increase from [about] 14.8% to [about] 17.8%," Shoprite said in a statement.
At a share price of about R175, the deal is worth more than R3bn.
But less control does not mean Wiese is exiting the business.
"I have been invested in Shoprite for 40 years and I have no intention, nor does my family have any intention, of not considering it a long-term investment," he told Business Times on Thursday.
The move is part of Shoprite's plans to simplify its voting share structure and align the company with international corporate governance practices.
It will also ensure all shares have equal economic and voting rights, the company said. But the deal will dilute the interest of ordinary shareholders by about 3.5%.
Until now, Wiese has been able to retain control of Shoprite with so-called deferred shares which carry more votes than ordinary shares.
SA's feeble economic growth has weighed on Shoprite's results in the past year.
But Wiese still sees the retailer as a long-term bet. "I've got full confidence in the consumer economy of SA and Africa going forward," he said.
Eighteen months ago Wiese still had plans to consolidate his Shoprite interests into Steinhoff International, which he also controlled at the time. A deal to have the global retailer's African subsidiary - then called Steinhoff Africa Retail (Star), but since renamed Pepkor - attain control of Shoprite was on the table in December 2017. But it was abandoned shortly after Steinhoff's share price collapsed in the wake of CEO Markus Jooste's resignation and the company postponing its results announcement due to "accounting irregularities".
Steinhoff's problems cost Wiese a fortune. Not only did the share fall by more than 90%, but most of his stake in the retailer was sold off by investment banks, which held it as security for loans worth more than R25bn.
Shoprite now represents the lion's share of Wiese's visible wealth. And when the company puts the transaction to the vote, he will have to sit on the sideline and watch whether minority shareholders approve it.
The deal is expected to be concluded by the end of September.
Shoprite was started in the 1960s and by the time Pep Stores bought the business in 1979 it consisted of eight stores. Whitey Basson moved from Pep Stores to run the company and built it into Africa's largest grocer, acquiring rivals Checkers and OK Bazaars along the way. Wiese attained control of Pep Stores in the 1980s, renamed it Pepkor, and kept control of Shoprite in this way until listing it separately in 1986.
Asked how he felt about letting go of control, he said: "I will remain the largest shareholder. I'm quite happy to accept that dispensation. I'm very comfortable with that."
Wiese also intends to remain chair of Shoprite after the transaction.
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