Dis-Chem ready for listing

238.4m shares to be sold

AS IT PREPARES to list on the JSE next month, Dis-Chem, South Africa’s second-biggest retail chain of chemists by number of stores, said on Friday that it would sell 238.4 million shares, equating to a 27.5 percent stake, at between R16.25 and R20.25.

The company intends to list on the “Food and Drug Retailers” sector of the main board of the JSE on November 18.

The listing would result in an injection of new capital to be used to repurchase shares from the existing shareholders, repayment of existing debt and “general corporate purposes,” according to Dis-Chem.

In an abridged pre-listing statement, Dis-Chem said the listing was an important part of the next phase in the company’s growth and evolution.

It said the listing would enhance its profile with investors, business partners and customers, position the company to further pursue its strategic growth plans. As a listed entity, Dis-Chem could access capital markets for future growth.

The company was founded by husband and wife Ivan and Lynette Saltzman in 1978. The pair opened their first pharmacy in Mondeor, south of Johannesburg.

Growth plans

The Saltzmans remain the company’s largest shareholders as the Saltzman Family Trust owns 66.9 percent of the company. The listing is consistent with the company’s aggressive growth plans.

Dis-Chem wants to double its store footprint in the next five to eight years by pursuing store roll-out opportunities and converting independent pharmacies to its brand.

“The company’s strategy remains to identify attractive locations for new pharmacies, as well as convert independent pharmacies in attractive script markets,” Dis-Chem said when it first announced the plans to list earlier this month.

Shmuel Simpson, an investment analyst at 36ONE Asset Management, said on Friday that he did not expect the group to struggle with the transition to a public company.

“Management has shown its ability to manage and grow

Dis-Chem wants to double its store footprint in the next five to eight years.

the business. As with any transition it may take some time to adjust, but I fully believe they will be able to do so successfully,” said Simpson.

He said the company’s management had indicated their desire to retain control after the listing “and I don’t see them reducing their controlling stake in the foreseeable future.” Existing shareholders would remain “materially” invested.

Dis-Chem has ambitious growth plans. It wants to double store footprint in the next five to eight years by pursuing store roll-out opportunities and converting independent pharmacies to the Dis-Chem brand.

Clicks Group, Dis-Chem’s competitor in retail pharmacy, has also been growing recently on the back of acquisition of independent pharmacies.

Simpson said smaller independent pharmacies would struggle to compete with the national chains, because they lacked their scale and distribution capabilities. “While there are still opportunities for independents in the current mar-