Trade report delay of Distell shares hints at high premium
By Ann Crotty - Nov 20th 2017, 10:45
It is still not clear why the parties involved in the R10bn trade in Distell shares waited six months to report the trade to the JSE as required by the exchange’s rules.
A reluctance to reveal the steep premium involved could be the only answer.
On Thursday, a spokesman for Anheuser-Busch InBev (AB InBev) subsidiary South African Breweries (SAB) confirmed the trade had initially been done off-market "due to the size and nature of the transaction".
In the off-market trade on April 12, the Public Investment Corporation (PIC) acquired 26.4% of Distell, equivalent to 58.7-million shares, from Other Beverages Interests (OBI), a subsidiary of SAB. On April 12, Distell issued a Sens statement, as required by JSE regulations, disclosing that OBI had disposed of its 26.4% stake in Distell and the PIC now held a 27.6% beneficial interest in the company. There was no reference to the price at which the trade was done.
The market had known since mid-December 2016 that the PIC was acquiring SAB’s stake in Distell.
On December 15, Distell said in a Sens statement referring to a joint announcement by Remgro and Capevin Holding on AB InBev’s proposed disposal of the SAB stake: "Distell welcomes the PIC as a new major shareholder, subject to implementation of the proposed disposal by AB InBev and is looking forward to working together."
There was speculation at the time that the transaction had been done at a hefty premium.
Those who track Distell closely could have accessed the share register and seen that as of mid-April the PIC was the registered holder of a 27.6% stake. Others would have seen from the Distell annual report that the PIC was now the second-largest shareholder in the group. Few thought any more about it until after October 6 when a large Distell transaction went through the market. It was a block trade of 58.7-million shares at a share price of R170.
The trade seemed to be the one referred to by Distell in its April 12 Sens statement but until last week no party involved on October 6 had issued a statement to confirm this or explain the six-month delay. On Thursday SAB said that it had been decided "in consultation with the JSE" to report the trade on market on October 6. SAB said the mechanics of the trade were done in consultation with the JSE, following which it was executed. "There was no exchange of shares as a result of this trade as settlement had already occurred."
Fidelis Madavo, PIC chief investment officer, confirmed SAB’s account.
"There was no transaction on October 6, it was simply a reporting issue; there were clearly people who were not happy about the off-market transaction and wanted the price disclosed." Madavo would not say who these people were, but hinted that they were other Distell shareholders.
JSE rules state there is no discretion on the matter of disclosure. Rule 6.30 relating to off-book trading requires the details of off-book trades to be submitted to the JSE’s equities trading system within hours.
While Distell had fulfilled its disclosure obligations on the matter the parties to the trade had not. What also remains puzzling is that the Distell share price graph does not reveal a trade being done at R170 at any stage in the past 12 months.© BusinessLIVE MMXVII
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