Food and pharmaceuticals group Tiger Brands on Thursday announced that it will unbundle and separately list retail group Spar on the JSE Securities Exchange (JSE) with effect from October 18.
Detailing the unbundling scheme, Tiger Brands said it plans to distribute a total of 168,76-million Spar shares to Tiger Brands shareholders in the ratio of one Spar share for every one Tiger Brands share held at the record date of October 22.
The distribution will be effected by way of a dividend in specie and a reduction in the share premium account of Tiger Brands.
Spar owns the retail chains of Spar grocery stores, Tops liquor stores and Build It building supply stores, organised as a voluntary trading group.
The unbundling will create a newly listed entity focusing on the distribution and supply of goods and services to independently owned Spar, Tops and Build It stores. As an independent and separately listed company, Spar will be better positioned to capitalise on its core competencies.
The unbundling will also allow investors to attribute appropriate individual share price ratings to Tiger Brands and Spar, aligned to the industry-specific dynamics of the respective companies.
It is anticipated that this will unlock shareholder value by reducing the discount at which Tiger Brands shares trade relative to the value of its underlying businesses.
The scheme is subject to the approval of Tiger Brands shareholders at a meeting set for October 8.
The JSE has agreed to the listing of the entire issued ordinary share capital of Spar in the non-cyclical services: food and drug retailers sector of the JSE list, under the abbreviated name “Spar”.
According to Spar’s abridged pre-listing statement, also released on Thursday, on listing, Spar’s authorised share capital will be R150 000, divided into 250-million ordinary shares of 0,06 cents each.
The issued share capital will comprise 168,76-million ordinary shares of 0,06 cents each, amounting to R101,26-million with a share premium of nil, all shares ranking pari passu (equally).
Spar focuses on the wholesale distribution and supply of goods and services to the independently owned stores in the group. Because it does not own any of the group stores, its financial performance does not depend on the performance of the stores.
Spar operates from six modern distribution centres, providing the backbone of its warehousing and distribution capability. It also has its own fleet of 150 trucks and 240 trailers for short- and medium-haul deliveries, while a limited number of long-distance deliveries are outsourced.
For the year to the end of September 2004, Spar is forecasting total revenue of R11,93-billion, up from R10,12-billion in 2003 and R8,35-billion in 2002.
Profit from operations is projected to grow to R410,2-million from R349,4-million a year earlier, and net profit is expected to rise to R286,6-million versus R253,48-million in 2003.
Headline earnings per share, meanwhile, are seen rising to 165,2 cents for the year to the end of September from 154,4 cents the previous year and 124,2 cents in 2002.
Spar said the recent fall in food inflation, currently running at about 2%, has impacted on the group’s sales and profit growth. It expects low levels of inflation will continue in the short- to medium-term, resulting in lower growth in revenues than those achieved in previous years when inflation had contributed substantially to sales growth. — I-Net Bridge