Christo Wiese Protects Price of Some Shoprite Shares

(Bloomberg) -- South African billionaire Christo Wiese agreed to a price-protection arrangement on some of his shares in grocer Shoprite Holdings Ltd. that led to banks placing about 3.6 billion rand ($265 million) of stock.

FirstRand Ltd.’s Rand Merchant Bank and Barclays Africa Group Ltd.’s Absa Capital placed about 17 million shares with institutions at 210 rand apiece, compared with a Tuesday closing price of 224.89 rand, according to an emailed statement Wednesday. The placement was instigated by one of Wiese’s investment vehicles, Titan Premier Investments (Pty) Ltd., which is Cape Town-based Shoprite’s biggest shareholder.

Wiese has been selling assets to raise money since Steinhoff Holdings International NV, another retailer in which he was the largest investor, announced accounting irregularities in December. The 76-year-old personally sold about 4.2 billion rand worth of Shoprite shares over three separate deals in the wake of the scandal. He’s also offloaded stock in companies including drugmaker Aspen Pharmacare Holdings Ltd. and investment company Brait SE.

Titan owns about 79 million shares in Shoprite, representing about 14 percent of the grocery chain, and doesn’t expect to make further transactions in the company, according to the statement. The deal was done using a so-called collar transaction, which enables Titan to protect a portion of its Shoprite stake and to better manage its balance sheet, it said.

“Titan continues to believe in the long-term value of Shoprite and will remain a strategic investor in the company,” it said.

Shoprite shares fell as much as 8.8 percent in Johannesburg on news of the discount sale, the most in 10 years, and traded 5.2 percent lower at 213.19 rand as of 2:20 p.m. in Johannesburg.

Steinhoff stock has crashed more than 97 percent since reporting the financial wrongdoing on Dec. 5, causing a slump in Wiese’s net worth to $2.2 billion from more than $5 billion. He’s suing the owner of Conforama in France and Mattress Firm in the U.S. for 59 billion rand. Shoprite’s stock has slid 10 percent over the same period, valuing the company at 126 billion rand.

In late 2016, Wiese had sought to merge the grocer with Steinhoff only for the talks to collapse amid a disagreement over valuations. The billionaire bought into Steinhoff when he sold his Pepkor Holdings Ltd., Africa’s biggest clothing chain, to the company for $5.7 billion in 2015. The retail entrepreneur will remain the company’s biggest shareholder, based on data compiled by Bloomberg.

©2018 Bloomberg L.P.