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The JSE confirmed it had “in principle” agreed to allow the listing of a partial holding in Shoprite, crucial to Brait’s planned private equity takeout of the retailer.

April 12, 2007

By Tom Robbins

Cape Town – The JSE confirmed it had “in principle” agreed to allow the listing of a partial holding in Shoprite, crucial to Brait’s planned private equity takeout of the retailer.

John Burke, the director of issuer services at the stock exchange, said on Tuesday there were some minor issues that needed to be addressed by Brait “and then we will give our approval”.

While it is JSE policy that listed companies investing in private firms hold a portfolio of investments in order to spread the risk to shareholders, it is not a minimum requirement and exceptions can be made.

The listing is necessary for the buyers, which include Shoprite chairman Christo Wiese, to secure approval for the deal from the retailer’s largest shareholder, Allan Gray, which holds 26 percent on behalf of clients.

Approval from the JSE will bring Brait one step closer to securing the buyout at the upwardly revised price of R28 a share, but the purchaser may well face yet a stiffer challenge to securing the deal.

The Securities Regulation Panel is yet to rule on an objection from some shareholders, including fund manager Peregrine, that Wiese be disallowed from casting his 43.3 percent voting block in the supermarket group.

Peregrine and others argue that Wiese is an interested and affected party to the deal and should not be allowed to vote.

In addition, Syd Vianello, retail analyst at Nedcor Securities, had predicted that Brait would either walk away from the deal or would have to up the offer price a second time after Absa Capital “withdrew” its fair and reasonable opinion on the offer.

Vianello argued that following Absa’s November 23 valuation, Shoprite had produced a strong set of interim results and that retail shares had performed strongly since that date, partly on account of the fact that interest rates had not been hiked this year.

He said Absa would have no choice but to value the company at a higher price when it gave its new opinion.

According to Brait executive director Eduardo Garcia, that valuation should be publicly available to shareholders in about three weeks’ time.

Garcia said the opinion as well as the formal announcement on the listing would be included in a circular to shareholders. But he expected that the JSE would make the formal decision on the listing a week earlier, and that there might well be some communication with shareholders on that date, without necessarily including the JSE decision.

Shoprite shares yesterday fell 0.68 percent to R29.20.