Mystery of R10bn JSE Distell trade
Exchange and firm tight-lipped as hefty transaction baffles shareholders
The JSE and Distell are refusing to shed any light on a R10bn trade in Distell shares on October 6, leaving minority shareholders to guess who the parties were behind the company’s biggest share trade to date. The shares were traded at R170 each, representing a hefty premium on the R130 at which the share price was trading on the day.
The JSE and Distell are refusing to shed any light on a R10bn trade in Distell shares on October 6, leaving minority shareholders to guess who the parties were behind the company’s biggest share trade.
The shares were traded at R170 each, representing a hefty premium on the R130 at which the share price was trading on the day. Shareholders had assumed the 58.7-million shares that went through the market on October 6 were the sale by Anheuser-Busch InBev (AB InBev) of its 26.4% Distell stake to the Public Investment Corporation (PIC).
But this assumption was at odds with Distell’s annual report, which stated that as at end-June 2017, the PIC held 61.6-million Distell shares, equivalent to 27.6% of the company. The company’s share register confirms that the PIC already held the 58.7-million shares at the end of April.
This is in line with a Sens statement issued by Distell on April 12, which notified shareholders that a subsidiary of AB InBev had sold its 26.4% stake in Distell. The Sens statement also said the PIC had acquired the interest in Distell and “it now holds a beneficial interest in the company of 27.6%”.
There was no sign of this volume of shares being traded in the market so Distell minority shareholders assumed it had been done off-market. All these assumptions held firm until market watchers spotted the R10bn trade on October 6.
The company did not issue a Sens statement, which it is required to do after a substantial transaction. The shares are tightly held, with Remgro-Capevin holding 53% and the PIC 27.6%. During financial 2017 only 14-million Distell shares were traded.
The PIC’s Deon Botha told Business Day it was not party to the transaction on October 6.
Distell suggested it was the PIC purchase of AB InBev shares, but when pressed for details would only say, “It was a neutral trade.”
The JSE was also tight-lipped on the unprecedented size of the trade. “We cannot provide comment as the JSE, as the identity of the parties behind the trade is privileged information that we cannot share publicly as the market regulator,” said a spokesperson for the exchange.
Distell minority shareholder Albie Cilliers is stunned by the response and wants Distell to explain what a “neutral trade” is. He also wants to know why the October 6 trade is not reflected on the company’s share register. Cilliers raised the possibility that there may have been an attempt to manipulate the market.
“Since the price of the block trade happened at R170 a share while the market price was around R130 a share it does raise the possibility of an attempt at manipulation,” he said.
“Did somebody trade with themselves in order to influence the market?”
The absence of disclosure around the October 6 trade not only left minorities in the dark but was contrary to the requirements of the Companies Act and the JSE regulations, he said.
“The JSE’s lack of concern around this R10bn transaction seems totally at odds with the heavy-handed treatment of James Gubb’s R400 trade in Oakbay shares,” said Cilliers.
THE COMPANY DID NOT ISSUE A SENS STATEMENT, WHICH IT IS REQUIRED TO DO AFTER A SUBSTANTIAL TRANSACTION
Investors didn’t seem very impressed with AnheuserBusch InBev’s (AB InBev’s) change of leadership at its critical North American operation. The share price eased back in early trade on Tuesday following Monday’s announcement.
The appointment of Brazilian-born AB InBev veteran Michel Doukeris is reminiscent of SABMiller’s appointment of Norman Adami to head the recently acquired Miller operation back in 2003.
The SAB team was struggling to reverse the fortunes of the US number two player and turned to its own home-grown talent in the form of Adami to pull off an almost impossible challenge.
There are differences this time: Doukeris is replacing a long-serving veteran of the South American beer company that acquired its way to the global number one position, and the US problems are in large part linked to AB InBev’s management style. Analysts contend it relies too much on cost-cutting its way to profit growth.
Sales in the US, which is the largest profit pool in the global beer market, have been on the decline for four years, despite the purchase of 10 domestic craft breweries. The September quarterly results revealed a 6.2% drop in sales, which was almost entirely attributable to the weakness of AB InBev’s two most important brands, Budweiser and Bud Lite.
Group CEO Carlos Brito says Doukeris’s background in sales will help tackle the challenge. He adds that the critical North American business will focus on category expansion and category management, which he says are approaches learned from SABMiller.
The waters in the local fishing industry have started to look a tad choppier as the 2020 allocation of long-term fishing rights draws closer.
There has not been a flurry of activity yet, aside from unlisted Terrafin acquiring the Saldanha Group’s fishing interests and Premier Fishing snapping up squid specialist Talhado.
Of course, the big talk around the quays is whether a buyer will emerge for AVI’s fishing assets (I&J, Simplot and a large abalone farm), which have been put up for “review”.
In the meantime, Bidvest Namibia — a subsidiary of JSElisted Bidvest — has renewed a cautionary announcement around entering negotiations to sell its 100% interest in Bidvest Namibia Fisheries Holdings (BidFish), excluding certain (unspecified) assets.
BidFish is a sizeable operation spread across Namibian and Angolan waters, generating sales of more than R1bn from frozen horse mackerel, monkfish, sardines, canned pilchards, fishmeal, fish oil and oysters.
It is an interesting time for Bidvest Namibia to contemplate a sale of its fishing assets. BidFish endured a rough financial year to end-June 2017, with trading profits sinking to about R40m from almost R200m in the previous financial year.
Commentary in the Bidvest Namibia annual report noted despondently that low private sector quotas — most notably horse mackerel and sardines — had become enduring features of the market.
Vessels are operating at or below the profit line and directors noted pressure on profit margins mounting every year.
The initial suggestion was that BidFish’s vessels could be sold or laid up for a period.
Now it seems more drastic action must be taken. Presumably, a few South African fishing enterprises are mulling the price of such a decision.