Family owned Dis-Chem has ended years of speculation. The pharmacy group on Monday announced plans to list on the JSE.
Dis-Chem expects to be listed in the Food and Drug Retailers sector of the JSE.
The move will allow founders to partially cash in on their investment and bring a rival to the sole pharmacy merchant on the bourse.
The company said the South Africa offering will only be made to selected institutional investors who fall within one of the specified categories listed in section 96(1)(a) of the South African Companies Act, 2008 or (ii) selected persons, acting as principal, acquiring offering shares for a total acquisition cost of R1,000,000 or more, as contemplated in section 96(1)(b) of the South African Companies Act and in each case to whom the Offering is specifically addressed. Accordingly: (i) the Offering will not be an offer to the public as contemplated in the South African Companies Act; and (ii) no prospectus has been, or will be, filed with the South African Companies and Intellectual Property Commission in respect of the offering.
Founded by chief executive Ivan Saltzman and his wife Lynette, Dis-Chem has grown from a start-up in 1978 to a major health products retailer with annual sales of more than 15 billion rand ($1.08 billion).
However, its store network of about 100 is dwarfed by its closest competitor Clicks Group Ltd, which runs more than 700 outlets that bring in around 23 billion rand ($1.66 billion)in annual sales.
"Our decision to list on the JSE is an important next phase of Dis-Chem's growth story," Saltzman, a pharmacist, said in a statement.
"It also facilitates a partial exit whilst allowing existing shareholders and key management to remain materially invested ensuring strong alignment between management, existing and new shareholders."
Dis-Chem did not give timelines or the size of the planned offer to selected institutional investors but said the share sale was subject to market conditions and regulatory approvals.
The company's existing shareholders comprise the Saltzman Family Trust, holding 66.9 percent of the company, while management and an unspecified financial investor hold 23.4 percent and 9.7 percent, respectively.
Goldman Sachs, Investec Ltd and Standard Bank have been appointed as joint global coordinators and joint bookrunners.
Merrill Lynch has been appointed as joint bookrunner while Investec and Standard Bank have been appointed to act as joint transaction sponsors.
In a Sens the group gave the following reasons for its listing:
Dis-Chem’s vision is to be South Africa’s leading retail pharmacy. Dis-Chem aims to continue growing its market share across its product offering by focusing on the customer and building on Dis-Chem’s brand positioning. Furthermore, Dis-Chem expects to maintain its category leadership by remaining responsive to changing consumer preferences and trends, such as food and sport supplements and beauty including colour cosmetics and treatments.
The Company intends to achieve this through four pillars of growth:
- Double its store footprint in the next five to eight years by pursuing store roll-out opportunities and converting independent pharmacies to the Dis-Chem brand. The Company’s strategy remains to identify attractive locations for new pharmacies as well as convert independent pharmacies in attractive script markets.
- Continue to seek innovative ways to increase its brand footprint through secondary retail opportunities.
- Improve operating margins by leveraging the investment made over the last two years in its supply chain infrastructure and its head office cost base.
- Expand CJ Distribution in the medium term by seeking opportunities to capture the supply chain of independent pharmacies and to gain scale, and to expand into the distribution business, whereby it would serve both wholesalers and retailers.