Activist challenges Remgro-Distell deal
SHAREHOLDER activist Albie Cilliers has forced a review of the Takeover Regulation Panel’s decision to waive Remgro’s obligation to make an offer to Distell minority shareholders.
Cilliers’ dramatic and unprecedented move creates uncertainty around the status of a multibillion-rand transaction that was eight years in the making and involved tens of millions of rands of legal and corporate advisory fees.
Legal counsel for the panel, Basil Mashabane, has informed Cilliers that the takeover special committee has convened a meeting on January 11 to hear his arguments as to why the panel should not have granted Remgro a waiver of the mandatory requirement to make an offer to minority shareholders.
If the panel rules in Cilliers’s favour, Remgro faces the possibility of the restructuring being unwound. One of the conditions precedent to the deal was the panel’s approval of the waiver.
This means Remgro will have to decide whether it wants to proceed with the deal. If it does it will have to go through much of the transaction process again and this time make an offer to minority shareholders.
The Distell share price has been on a weaker trend and given that Remgro is not keen to acquire the shares, an offer between R130 and R140 would probably be in order.
That would set Remgro back by about R5-billion, assuming all 17.7% of the small minority shareholders accepted the offer. The Public Investment Corporation (PIC), with 27.7%, is unlikely to be interested in selling.
In October Distell shareholders voted overwhelmingly in favour of the restructuring transaction at a special meeting ahead of the annual general meeting.
The deal involved the collapse of a decades-old control structure that analysts said restricted Distell’s ability to secure funding for growth.
Ahead of implementation Remgro and CapeVin had joint control of 52.8% of Distell, the PIC had 27.7% and shareholders 17.7%.
The remainder are treasury shares. After completion of the restructuring – tagged for February 8 2018 – Remgro was set to minority have 56% of the voting rights (31.4% of economic rights); the PIC 20.1% of the voting rights (31.4% economic rights); CapeVin with 11.6% of the voting rights (18.1% economic); and the public with 12.3% (19.2% economic).
Cilliers, who was unhappy with Remgro assuming outright control without making an offer to minorities, voted against the transaction. His challenge is based on his view that given the circumstances of the deal and the requirements of the companies regulations the panel did not have the authority to grant a waiver.
Granting a waiver requires that independent holders of more than 50% of the voting rights agree to it.
Although 99% of the minority shareholders voted in support of the transaction, Cilliers said because Remgro and CapeVin held 52.8% of Distell there were only 47.2% independent shareholders. This, he said, meant that the transaction could not be exempted. Cilliers said the panel was incorrectly informed that no shareholder had objected to the transaction, and said that he had lodged an objection.
In its letter to Remgro explaining the reasons for granting the waiver, the panel said it had not received any objection.
Remgro chief executive Jannie Durand – also nonexecutive chairman of Distell – said Remgro was aware of the appeal. — BDLive