In short sup­ply

Finweek English Edition - - COMPANIES & MARKETS - MARC HASEN­FUSS

WITH PAARL-BASED wine and brandy spe­cial­ist KWV Hold­ings firmly in play it may be a good time for smaller in­vestors to cast their blood­shot eyes to­wards Stel­len­bosch and that great liquor ed­i­fice called Dis­tell. Now Dis­tell – on an earn­ings mul­ti­ple ba­sis – prob­a­bly can’t be re­garded as “cheap” – at least not as “cheap” as some pun­dits in the mar­ket are la­belling the in-vogue KWV.

But Dis­tell – which owns an ar­ray of liquor brands (span­ning ciders and RTDs to fine wines and plonk, as well as top-sell­ing spir­its brands) – has a sound long-term per­for­mance record that war­rants a su­pe­rior rat­ing… even when the ro­bust rand is di­lut­ing ex­port mar­gins. And the com­pany, even in tough trad­ing times, usu­ally man­ages to pay a stout div­i­dend.

While Dis­tell’s re­li­able, profit per­for­mances should be enough to draw in­vestor in­ter­est from seg­ments of the mar­ket seek­ing a de­fen­sive hold­ing, Fin­week be­lieves there are much more in­trigu­ing as­pects to con­sider when weigh­ing up the com­pany as a prospec­tive in­vest­ment. Its an­nual re­port shows 87,24% of Dis­tell sits in the hands of two share­hold­ers: Rem­gro/CapeVin (58,16%) and SABMiller (29,08%).

Re­cent de­vel­op­ments strongly sug­gest Rem­gro – which has shifted its ef­fec­tive stake in Dis­tell to more than 33% – is de­ter­mined to hold the biggest tot. On the other hand, SABMiller seems aw­fully re­luc­tant to let go of its strate­gic hold­ing – no mat­ter that wine and spir­its aren’t core to its frothy port­fo­lio of brands. Ad­mit­tedly it’s an old ar­range­ment (and one that’s com­pli­cated and con­vo­luted) but some­thing surely has to give? The log­i­cal step would be for Rem­gro to make a buy­out of­fer to Capevin share­hold­ers (both Capevin Hold­ings and the listed CapeVin In­vest­ments) as well as SABMiller.

It might be re­ward­ing to be cling­ing to scarce Dis­tell scrip should the own­er­ship cock­tail at this cor­po­rate be shaken and stirred. And if noth­ing tran­spires over the medium term, sit back and en­joy the div­i­dend flows.

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