Fam­i­lies aren’t forced to be pyra­mids

Finweek English Edition - - COVER STORY -

were, un­til late last year, a clas­sic pyra­mid struc­ture. Top-listed hold­ing com­pany was Mo­bile, with a 46,25% share­hold­ing in Trencor, which in turn holds 61,8% of New York Stock Ex­change-listed Tex­tainer.

At the very top was the Jow­ell fam­ily, hold­ing 25,1% of Mo­bile. And not un­like Pick n Pay – where fa­ther Ray­mond Ack­er­man and son Gareth chair the re­spec­tive listed hold­ing com­pa­nies (and swapped chair­man po­si­tions last year) – Ce­cil Jow­ell is chair­man of Mo­bile and Neil Jow­ell chair­man of Trencor.

But fol­low­ing var­i­ous board meet­ings – and no doubt much re­flec­tion – Trencor and Mo­bile de­cided to un­bun­dle the en­tire 46,25% hold­ing Mo­bile had in Trencor, wrap­ping up the pyra­mid struc­ture. The deal in­volved a sub­stan­tial share buy­back by Trencor and ne­go­ti­a­tions with the JSE, which ruled that de­spite the un­bun­dled stake Mo­bile was still an as­so­ci­ate of the Neil and Ce­cil Jow­ell trusts. How­ever, the is­sue was re­solved with the JSE and early this year Mo­bile and Trencor told share­hold­ers all con­di­tions prece­dent had been met and the un­bundling would be im­ple­mented – which is tak­ing place about now and into the first week of Fe­bru­ary.

In terms of the un­bundling, Mo­bile share­hold­ers will re­ceive 8,117 Trencor shares for ev­ery 100 Mo­bile shares held, based on a price a lit­tle higher than the cur­rent 3500c/share Trencor was trad­ing at last week.

What the ex­er­cise demon­strates is that pyra­mid struc­tures are un­pop­u­lar, even with some of the com­pa­nies us­ing them. It also shows fam­ily con­trol doesn’t have to be pro­tected through ar­ti­fi­cial con­trol. It may be a lit­tle daunt­ing for a fam­ily to let go but, ul­ti­mately, con­trol is pro­tected by good op­er­at­ing and fi­nan­cial re­sults.

The his­tory of vol­un­tary dis­man­tling of pyra­mids also goes back a num­ber of years, the ear­li­est ex­am­ple we were told about be­ing Brian Joffe and Bid­vest. In its early days – it was a clas­sic pyra­mid, with con­trol re­tained through top-listed hold­ing com­pany Bid­corp. But Joffe de­cided to get rid of the struc­ture, ap­par­ently be­cause he felt it was the right thing to do.


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