Families aren’t forced to be pyramids
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.