Cape Town - Retailer Pick n Pay announced on Tuesday it was seeking shareholder approval for a proposal to replace its current pyramid ownership structure with a simpler, single share listing.
Shareholders will vote on July 25 on the proposal, which had been approved by the boards of both Pick n Pay Holdings and Pick n Pay Stores.
Pick n Pay Holdings shares rallied 12.95% on the news to trade at R32.10 shortly after the market opened, while Pick n Pay Stores shares gave up 0.94% to R69.34.
The group said in a statement that the pyramid structure, which takes the form of a dual listing on the JSE, was introduced in 1981 by the Ackerman family to prevent a hostile takeover and ensuring that the founding values of the business remain in place through family control of the company. The Ackerman family owns more than 50% of shares in Pick n Pay Holdings [JSE:PWK], which in turn owns more than 50% of shares in Pick n Pay Stores [JSE:PIK].
Pick n Pay chairperson Gareth Ackerman said his family has for some time been looking to unbundle the pyramid in a way which benefits the company and all its shareholders.
“Unbundling the pyramid will streamline the Pick n Pay Group into one listed entity, with benefits for the company and potentially for all shareholders. Over time, the simpler structure should improve Pick n Pay Stores’ appeal to investors, which could in turn help our long-term growth strategy."
In essence, the proposal will:
· collapse the pyramid by unbundling all shares in Holdings, with Holdings shareholders receiving shares in Stores on a pro rata basis;
· mean that all shareholders in Pick n Pay will hold their shares in a single Stores listing. Holdings would delist from the JSE, and would be wound up;
· allocate to the Ackerman family a new class of unlisted voting shares in Stores (“B Shares”). This will ensure that the Ackerman family continues to have a controlling interest in the company.
To ensure that the interests of minority shareholders are taken fully into account in the decision to unbundle the pyramid, the Ackerman family will not vote on the proposal, nor will Holdings exercise its share in the Stores vote.
Ackerman said he believes the proposal for the Ackermans to maintain voting control over Pick n Pay is to the benefit of the company. "The family has had control of the company for almost 50 years. We are delighted with the leadership shown by Richard Brasher and his team, and their commitment to the founding values of the company. This new structure will ensure stability, limit uncertainty and allow our excellent management team to get on with the vital job of completing the turnaround of the business.”
CEO Richard Brasher said he sees the move as the next step in the group's modernisation programme.
“It will modernise and simplify Pick n Pay by creating a single, unified structure. It will increase the free float in Stores from about 46% to around 73%. This should over time make the company more attractive to investors. By unbundling Holdings shares into Stores, it will also eliminate the current discount between the two shares."
Pick n Pay founder Raymond Ackerman said the family intends to stay invested and involved in Pick n Pay.
"We have a highly effective team managing the company, and our continuing involvement will ensure consistency in the company’s direction and continuity in our values.”