Shoprite last month announced a deal that would loosen chairman Christo Wiese’s grip on the retailer. By buying back a class of shares that gave Wiese the lion’s share of the voting rights, Shoprite will pay the billionaire about R3.5bn in ordinary shares.
Wiese has held control of Shoprite since the early 1980s. And it has been a long road to grow the retailer into SA’s largest. Steady expansion was the secret, but with a few game-changing deals in between. One such transaction was the R1 deal of 1997. TJ Strydom explains in this extract from his unauthorised biography ofWiese titled Christo Wiese: Risk & Riches
In the photograph the two are beaming. At opposite sides [Christo] Wiese and [James Wellwood (Whitey)] Basson are holding a board with the words "OK. We are there for you!"
That was after the transaction had taken place. But it was a close call: OK Bazaars was on the brink of vanishing.
All the same, the two friends managed late in 1997 to buy the retail group, founded in 1927 and first listed in 1929, for only R1.
As part of the deal, Shoprite absorbed a large loss which it could carry over for years to lessen its tax load. And don't forget about the assets of R540m (even though Shoprite and SAB later slugged it out in court over their exact value). Actually, it was more than R540m.
"Part of the deal was that there had to be R1bn worth of net assets. In truth we never paid a rand; we got a billion rand for buying the business," said Wiese.
The problem? OK Bazaars was making a loss of nearly R1m per day.
The story goes that OK co-founder Sam Cohen carried a handkerchief in his pocket with the letters YCDBSOYA embroidered on it, writes the financial journalist Marcia Klein. These letters represented Cohen's business philosophy: You can't do business sitting on your arse. Unfortunately for OK, by the 1990s that is what had been going on for years.
"When I grew up, the retail scene in South Africa was dominated by the OK Bazaars," said Wiese.
"[It] was so far number one that nobody else came close."
Decades after the rest of the retail sector had moved on, OK still ran its outlets more or less as department stores. At the OK you could buy milk and bread, and also a spanner and a lounge suite.
Whereas Pick n Pay and Checkers opened many of their outlets in suburban shopping centres, OK was used to being located at the centre of a town or city's business life. Many of its stores were too big and they eventually became trapped in city centres where passers-by could not hope to afford its mix of goods.
The chain also waited too long before considering distribution centres and modern warehousing. The OK's suppliers consequently made deliveries to every shop.
In 1973 SAB acquired a controlling stake in OK Bazaars and for a time Meyer Kahn, later the brewer's chairman, was the retailer's managing director.
"When it was run by Meyer Kahn ... it was a great business," says Wiese.
In 1983 Kahn left for SAB's head office and in the recessionary years of that decade the retailer declined.
But the brewer was a patient shareholder - perhaps because it was raking in steady profits from its core business and was not dependent on the OK's performance.
Other shareholders, especially small ones such as individuals, completely lost hope, and eventually it was only a few institutional investors that held the stock in their portfolios.
In 1993 SAB bought out the minority shareholders and made a final go of it by giving OK a complete makeover.
But it wasn't the exterior or the public face that was the issue; the big problem was behind the scenes - the systems and the technology were ancient.
By 1997 OK did not have a workable computerised system in its head office. Its information systems were so dysfunctional that it was impossible to know which of the retailer's stores were profitable and which were not.
This is a huge problem if you have about 130 supermarkets, 18 hypermarkets and more than 140 furniture outlets to manage.
"OK is a company that has been bankrupt for numerous years. It is like a man with a Ferrari who cannot get it serviced," said Basson.
Rumours swirled that foreign retailers were eyeing OK. The UK's Sainsbury's and US-based Wal-Mart were named as groups that had a peek but then said they weren't interested.
But they would have been mad to take it over, says Basson, because they had no structure onto which they could graft the OK's assets and liabilities.
Pick n Pay possessed such a structure, but it also said no thank you.
By the late 1990s SAB was anxious to dispose of its loss-making subsidiary. The brewer was bent on international expansion, but SA's exchange controls stood in the way of the large deals it was lining up.
SAB wanted to list in London where it could raise the capital it needed for acquisitions. OK was an albatross that it had to get off its neck before listing abroad.
Investors like knowing what they are in for. A brewer with exposure to emerging markets might be an attractive investment. But if that exposure includes a retail chain that has drained R1.6bn from the brewer's coffers in three years, it looks much less attractive.
According to Wiese, SAB's market value was R4bn lower with OK in its stable than it would have been without OK.
And so the brewer sold OK Bazaars to Shoprite for R1.
"They did very well out of it, they got rid of a liability they couldn't run properly," said Basson, joking later that he should have bargained the other side down to 99 cents.
Christo Wiese: Risk & Riches is published by Tafelberg. The author is a senior reporter at  Business Times
This money in my bags, officer? It's just a few million
The Slumdog Millionaire theme song bursts over the radio at regular intervals.
'Jai Ho! . Catch me, catch me, catch me, c'mon catch me,' sing Nicole Scherzinger and the Pussycat Dolls on a crisp London morning. The tune has been on Britain's top 10 chart for three weeks.
The mercury won't climb higher than 11°C today. It's overcast and it looks like rain.
Christo Wiese is on his way to the airport. It takes less than an hour to get from the Ritz Hotel to the terminal.
London City Airport is a favourite among business travellers. It's much closer to the City than Heathrow or Gatwick and has an expedited procedure at the check-in counter.
Wiese wants to catch an early flight to Luxembourg, returning the same day. It's a Monday in April and at the weekend he attended a wedding in Russia. His flight to Moscow was booked so as to give him the chance of casting his vote in Cape Town in SA's general elections before departing.
"I have no reason to believe that Jacob Zuma would do a worse job than anyone else," the Sunday newspaper Rapport quoted him as saying.
Whether his vote was one of the 11.6-million cast that gave Zuma and the ANC a comfortable majority in the 2009 elections is his secret.
Other business leaders are worried about the new man on his way to the Union Buildings, but Wiese is ever the optimist. "What possible advantage is there in being negative?
"I know our country has problems. All countries do, and you are surely better equipped to handle the challenges and problems where you live and know the territory."
Today, he is entering uncharted territory.
A customs official searches Wiese's hand luggage and finds it stuffed full of banknotes. It's a stash of £120,000 (at the time worth more than R1.5m) in used £50 and £20 notes. The official questions him about the bonanza.
It's from a safety deposit box at the Ritz Hotel, he explains, but until the end of last year it was in a strongbox with UBS, a bank, here in London. On the form the official hands him to fill in, he notes that he is carrying the money to keep in safe storage. Wiese also provides a contact number for the relevant person at UBS and gives the details of his accountants.
A while later the officials go through Wiese's checked-in baggage and discover more notes, some in a poor state, bundled together and bound with elastic bands. They estimate the find at between £400,000 and £500,000. The actual amount is £554,920 (another R7m).
Now why didn't he declare this money on the form he had just filled in?No, he thought they were only asking about the money in his hand luggage.Wiese explains to the officials that he is a regular visitor to the UK. He tells them that his company Pepkor has four thousand stores that sell a variety of goods. The money they see here in his suitcases is from SA and is the proceeds of diamond deals in the 1980s and 1990s.The money was taken out of his home country in the form of travellers' cheques and had been cashed abroad and then stored.Owing to SA's foreign exchange controls at the time, the money was taken either to Britain or Switzerland. And now he is on his way to Luxembourg to invest the money there or open an account.Then why keep the money in a strongbox all this time and not in a bank?He didn't want to leave an audit trail, as previously in SA one was not allowed to keep money offshore. By keeping it in strongboxes there would be no paper trail, he tells the officials.Wiese is polite and gives his co-operation throughout the questioning. He can go. But his money stays behind in the UK. The authorities apply to have it forfeited to the state. To them this stash of notes looks as if it was laundered...