Pyramid structure unbundling
Pick n Pay Stores announced that it is seeking shareholder approval for a proposal to replace its current pyramid ownership structure with a simpler, more modern single share listing. Shareholders will vote on 25 July.
The pyramid structure was introduced in 1981 by the Ackerman family to prevent a hostile takeover. It ensures that the founding values of the business remain in place through family control of the company. The pyramid takes the form of a dual listing on the JSE. The Ackerman family owns more than 50% of shares in Pick n Pay Holdings Limited (Holdings), which in turns owns more than 50% of shares in Pick n Pay Stores Limited (Stores).
This type of structure has come over time to be seen as cumbersome and outdated, and the Ackerman family has therefore come forward with a proposal which would unbundle the pyramid structure while retaining family control. The proposal has been approved by both Pick n Pay Boards.
In essence, the proposal will:
- collapse the pyramid by unbundling all shares in Holdings, with Holdings shareholders receiving shares in Stores on a pro rata basis;
- mean that all shareholders in Pick n Pay will hold their shares in a single Stores listing. Holdings would delist from the JSE, and would be wound up; and
- allocate to the Ackerman family a new class of unlisted voting shares in Stores (B Shares). This will ensure that the Ackerman family continues to have a controlling interest in the company.
To ensure that the interests of minority shareholders are taken fully into account in the decision to unbundle the pyramid, the Ackerman family will not vote on the proposal, nor will Holdings exercise its share in the Stores vote.