Africa’s largest retailer Shoprite’s share price knocked on Christo Wiese’s derivative transaction

*Update, the story written by Reuters was inaccurate. According to Christo Wiese, speaking on 702, the transaction was not a sale of shares but a derivative transaction aimed at stabilising his balance sheet.  Shoprite issued the following statement to clarify

Rand Merchant Bank (a division of FirstRand Bank Limited) (“RMB”) and Absa Bank Limited (acting through its Corporate and Investment Banking division) (“Absa”) (collectively the “Sellers”) announce the launch of an accelerated bookbuild offer of up to 17,017,500 Shoprite Holdings Limited (“Shoprite”) ordinary shares (the “Placement Shares”) pursuant to a derivative transaction entered into with Titan Premier Investments Proprietary Limited (“Titan”) (the “Placement”).

Titan and its subsidiaries currently hold c.79 million Shoprite ordinary shares, representing c.14% of the total issued ordinary shares of Shoprite. Titan has entered into a collar transaction with the Sellers on c.18.9m of Shoprite shares (the “Collar Transaction”). This transaction is part of Titan’s ongoing investment and balance sheet management. Following the Collar Transaction, Titan will have achieved the optimum composition of its balance sheet and no further transactions in relation to Shoprite are contemplated.

Titan believes that it is prudent to manage portfolio risk through this hedging transaction given Shoprite’s concentrated position in its investment portfolio. The Collar Transaction enables Titan to protect a portion of its Shoprite exposure. Titan continues to believe in the long-term value of Shoprite and will remain a strategic investor in the company.

The Placement Shares represent 2.9% of the total issued ordinary shares of Shoprite. The Placement is being made to qualifying institutional investors only and is not an offer to the public in any jurisdiction. The book for the Placement is open with immediate effect and is expected to close as soon as possible. Pricing and allocations will be announced as soon as practicable following the closing of the book.

RMB, Absa and Morgan Stanley & Co. International plc are acting as joint bookrunners (the “Joint Bookrunners”) for the Placement.

JOHANNESBURG (Reuters) – South African tycoon Christo Wiese sold part of his stake in grocer Shoprite (SHPJ.J) on Wednesday, raising 3.6 billion rand ($264 million) and shoring up his finances, which were dented by his exposure to scandal-hit Steinhoff.

Shoprite’s share price dropped almost 6% to R211,55 on Wednesday. 

READ: Billionaire Christo Wiese sells over $80mln in Shoprite shares

Nearly $15 billion has been wiped off Steinhoff (SNHJ.J) (SNHG.DE) shares over the last six months after the owner of Mattress Firm and Conforama revealed holes in its accounts.

Wiese was particularly hard hit by the fall as the largest shareholder in Steinhoff, with a stake of about 20 percent.

Wiese’s company Titan sold 17 million shares, or a 2.9 percent stake, at 210 rand each in Shoprite, a 130 billion rand company he transformed from just six outlets in the 1970s to hundreds across Africa.

“This transaction is part of Titan’s ongoing investment and balance sheet management,” Morgan Stanley said in a statement. “Titan continues to believe in the long-term value of Shoprite and will remain a strategic investor in the company.”

The sale, which was via a so-called accelerated bookbuild, reduces Wiese’s stake in Shoprite to about 11 percent. He stake was as big as 17 percent in early December.

Shares in Shoprite fell as much as 9 percent before recouping some of the losses to trade 5.3 percent lower at 212.99 rand as of 0844 GMT.

RMB and Absa also helped arrange deal.

Related Content

MG Commodities wins big at the Shoprite supplier awards

MG Commodities, which supplies rice and sugar beans to the Shoprite Group, won in the SMME category at the Group’s 2019 Supplier Awards. The family-owned company supply Shoprite and Usave stores in Lesotho but plan to expand further. CNBC Africa is joined by the General Manager of MG Commodities, Katleho Motsoasele.

Shoprite investor moves to counter Wiese’s dominance as search for new chair heats up

It is almost a week since Shoprite Chairman Christo Wiese announced that he will be retiring at the group’s next AGM meeting after serving on the board for almost 3 decades. The shakeup in Shoprite leadership started before Friday’s announcement by Shane Watkins, CEO at All Weather Capital when he nominated Jan le Roux, a former CEO of Pepkor, as a non-executive director of Shoprite to counter Wiese’s dominance. Shane Watkins joins CNBC Africa for more.

Christo Wiese: Why I am standing down at Shoprite’s next AGM

CNBC Africa spoke to outgoing Shoprite chairman Christo Wiese about his decision to step-down at next year’s annual general meeting.

Mergence, Christo Wiese’s Titan joins forces to repair Brait

Activist investor Mergence has joined forces with billionaire Christo Wiese’s Titan to repair Brait’s balance sheet and unlock value at the investment...

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

South Africa records first current account surplus in 17 years

JOHANNESBURG (Reuters) - South Africa recorded its first current account surplus in 17 years in the first quarter of 2020 as the...

SAA administrators aim to publish revised plan on July 7

JOHANNESBURG (Reuters) - Administrators at South African Airways (SAA) aim to publish a revised restructuring plan on July 7 incorporating some ideas...

The Rise Of Twitter

Twitter was born in 2006 out of the remnants of a failed San Francisco Internet radio startup. Since then, it’s become a megaphone for the president, a tool for social change and a running log for recording our global history. Twitter has removed

UK PM Johnson says statue of colonialist Rhodes should not fall

It would, he said, be like “trying to bowdlerise or edit our history ... like some politician sneakily trying to change his Wikipedia entry,” the Standard reported.

Partner Content

Sanlam launches urgent job-preservation initiative in response to COVID-19

Sanlam Investments is responding to the COVID-19 pandemic through large-scale support of the recovery of South African companies, from small enterprises to...

Is Market Volatility Here For The Foreseeable Future?

Content provided by CompareForexBrokers Prior to understanding why market volatility might be here to stay for the foreseeable future,...

Trending Now

South African rand opens stronger after positive data

JOHANNESBURG (Reuters) - South Africa’s rand opened stronger on Friday and was on course for gains of roughly 2% against the dollar...

Pirates kidnap nine in attack on vessel off Nigeria, says ship owner

OSLO (Reuters) - Pirates attacked an oil production vessel off Nigeria in the early hours of Thursday and kidnapped nine Nigerian nationals,...

Coke The Secret Formula EP2: Highlights Special

In this second episode Asanda travels to the Kingdom of Eswatini to investigate what Project Last Mile is doing to help educate young girls and women about their personal health, HIV and teenage pregnancy. It's a poignant journey into the soul of a kingdom striving to fight new infections and deal with health issues head on....

Tesla stock hits record high and smashes Wall Street expectations: CNBC After Hours

CNBC.com's MacKenzie Sigalos brings you the day's top business news headlines. On today's show, CNBC's Phil Lebeau breaks down the latest delivery numbers from Tesla and outlines the company's monster week on Wall Street. Also, CNBC's Meg Tirrell dig
- Advertisement -