Shoprite Seeks to Curb Influence of Chairman Christo Wiese

(Bloomberg) -- Shoprite Holdings Ltd. is in talks with billionaire Chairman Christo Wiese about giving up his extra voting rights in Africa’s biggest grocer, a move that would simplify the share structure and help to empower smaller investors.

Wiese’s Thibault Square Financial Services controls almost a third of the votes at the Cape Town-based company through deferred shares, which carry greater influence than ordinary stock. Shoprite is negotiating to buy or redeem and cancel them, the retailer said in a statement on Tuesday.

“We’ve had many requests from shareholders to deal with this capital structure,” Chief Executive Officer Pieter Engelbrecht said in a phone interview from Cape Town. “So let the shareholders once and for all vote which way to go, so we know where we stand and can carry on with running the business.”

The plan will improve corporate governance and ensure that all remaining shares have equal economic and voting rights, Engelbrecht said. It’ll also reduce the influence of Wiese, 77, whose net worth has plunged over the last 15 months mainly due to the near collapse of Steinhoff International Holdings NV, where he was also the biggest shareholder, amid an accounting scandal.

“We view this as a positive step for Shoprite as there will be an equalization of the voting rights,” Pratish Soni, an analyst at Avior Capital Markets in Cape Town, said in an email. However, an agreement to purchase Wiese’s stake could come at a high cost to Shoprite as the billionaire “may be demanding with regards to the payout value.”

Shoprite gained as much as 7.1 percent in Johannesburg after announcing the share simplification plan and after reporting first-half earnings. An independent board has been set up to consider the proposed transaction, with Investec Ltd. appointed as financial adviser to Shoprite. The proposal will be discussed with shareholders before a vote, in which Wiese can’t participate, and a decision on whether to proceed should be taken in the next 10 weeks, Engelbrecht said.

Wiese has been selling assets to raise funds since Steinhoff announced accounting irregularities in December 2017. A year earlier, he had proposed a merger of Shoprite with Steinhoff’s African operations, though the plan failed to materialize because of a dispute over valuations.

The billionaire is among investors suing Steinhoff after the company lost more than 90 percent of its market value in the wake of the scandal. His association with Shoprite dates back to the late 1970s, when his clothing retailer Pepkor took control of the then-tiny chain ahead of its listing in Johannesburg.

Shoprite shares traded 4.8 percent higher at 169.64 rand in Johannesburg, valuing the company at 100 billion rand ($7.2 billion).

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