Remgro to raise R9.9bn as Johann Rupert mulls Distell deal

Johannesburg - Remgro [JSE:REM] plans to raise more than R9.9bn ($739m) from shareholders as the company controlled by South African billionaire Johann Rupert considers deals including a right to buy SABMiller [JSE:SAB] stake in drinks maker Distell Group [JSE:DST].

The company plans to raise the funds through a rights offer and the sale of B shares, it said in a statement after the market closed in Johannesburg on Tuesday. Investors will be entitled to 10 shares for every 100 they own at a price of R192.50 each under the terms of the rights issue. That’s a discount of 21% to Tuesday’s closing price of R241.72.

The investment group has first refusal on SABMiller’s 26% holding in the maker of Amarula liqueur and Klipdrift brandy, valued at about R9.5bn. The brewer was told to sell the asset by antitrust authorities as a condition to winning South African approval for its takeover by Anheuser-Busch InBev [JSE:ABI]. Remgro already owns almost 53% of Distell.

No agreement regarding the deal has been reached and Remgro will only exercise its right on “commercially appropriate terms,” the Stellenbosch, South Africa-based company said. “Other strategic opportunities are also being explored by Remgro and its portfolio companies.”

Remgro shares fell 0.97% to R239.37 by 10:43 in Johannesburg for a market value of R115.16bn. Distell declined 0.17% to R162.70.

South Africa’s Competition Tribunal ruled that the stake in Distell had to be sold as a condition to agreeing to the takeover by AB InBev, which would create the world’s largest brewer. The deal will be considered by SABMiller shareholders on Wednesday, with most voting by proxy supporting the $104bn takeover offer, according to people familiar with the matter.

Rupert companies

Remgro also owns stakes in consumer-goods companies including Unilever South Africa and RCL Foods [JSE:RCL]. It holds more than 40% of private-healthcare provider Mediclinic International [JSE:MDC]. Rupert’s net worth is about $6.4bn, according to the Bloomberg Billionaires Index.

Two Rupert family-related companies have undertaken to subscribe for 1.4 million rights issue shares and the remaining 46.7 million have been underwritten by FirstRand's Rand Merchant Bank unit.

Any surplus cash not used for “strategic opportunities” may also be used to repay debt, Remgro said.