Dis-Chem founder sells billions of shares and names new CEO

SOUTH AFRICA – The founders of Dis-Chem, Ivan and Lyn Saltzman, have begun reducing their majority shareholding in the pharmaceutical retailer. Over the coming months, they will sell between R5.4 billion and R5.5 billion (US$367.8 million) in shares to various investors.

Dischem has also announced that Rui Morais will take over from outgoing CEO Ivan Saltzman, as company CEO with a focus to propel the company to future growth.

The group announced that the family would sell 64.5 million shares (or 7.5% of the company) via an accelerated bookbuild offering.

Later, the company has confirmed that this bookbuild has closed following strong demand. This stake was sold at R30.30 (US$2.03) per share, representing a 4% discount to yesterday’s price.

Ivlyn Ltd, the founders’ investment vehicle, whose ultimate shareholder is the Saltzman Family Trust, raised R1.96 billion (US$131.1 million) through this sale.

Founders will divest a further 32 million shares (or 3.75% of the group) to a select number of key senior executives who are central to the delivery of the company’s strategic priorities.

It says current CFO Rui Morais is included in this. The group revealed in its 2021 annual governance report that Morais had been approved by the nomination committee as successor to the current CEO Ivan Saltzman. This followed concerns from shareholders and investors regarding succession planning.

The group also announced a third transaction where the family will sell a further 86.5 million shares (or 10.05% in the group) to a consortium of black economic empowerment (BEE) investors.

Prior to these transactions, the founders held 52.67% of the business (or 453 million shares). Once all three transactions are complete, this shareholding will be reduced to 31.4% in the group.

The family has agreed to a lock up of 360 days on the remaining holding, which seems to hint that it has plans to dispose of a further portion of this thereafter.

Yesterday, the pharmacy retailing chain said its revenue was up 16.3% to R13bn in the 22 weeks to 6 Aug, compared with a year before.

The company’s margins, however, were impacted by high volumes of low-margin sales of Covid-19 related products, as South Africa entered the third wave of the pandemic and the government-imposed restrictions that impacted normal sales.

The revenue improvement also came despite trading at some of the stores of Dis-Chem, which runs the second-largest chain of pharmacies in the country, being halted due to week-long unrest in the country last month.

Around R40m worth of products were either damaged or stolen and around R70m worth of trading was lost due to the unrest, it said, adding that this would impact its total income by approximately R15m.

Two stores out of the five that were hit have been reopened and are trading, while another two are expected to reopen by the end of September 2021, the pharmacy chain said.

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