What's with the 'special' shares? (#447)

Simon Shares

• Santova (JSE code: SNV) were very solid and they are now truly a global logistics business.
• Distell (JSE code: DGH) announced that Heineken wants a 'majority' stake in the company. Details are scant with major shareholders being PIC and Remgro (JSE code: REM) both just over 31%. But does the majority mean they want the cider business or +50% of the shares which would trigger a mandatory offer to minorities? This of course after Heineken threatened to take their beer and go home last year during the alcohol ban.

hmmm, wasn't it just last year Heineken was hating on us so much they was canceling projects and threatening to take their beer and go home ..

— Simon Brown (@SimonPB) May 18, 2021

 

• Balwin (JSE code: BWN) & Calgro M3 (JSE code: CGR) results both showed a tough year. But I like this space. Calgro offering its units at the R500k price point (R4,000 monthly bond costs) while Balwin starts at a little under R1million to around R2million. So different markets.
• Redefine (JSE code: RDF) results saw loan-to-value (LTV) improving but what struck me is that they value properties twice a year. Most doing it over a rolling three years.
• Local CPI hit a 14-month high in April, mainly driven by rising transport and food prices. The rate was 4.4%, up from 3.2% in March.
• Thursday is the MPC rate decision, no change expected.
• Eurozone April CPI +0.6% on Month, +1.6% on Year. Core CPI +0.5% on Month; +0.7% on Year
• Crypto crashing, entire crypto market cap is off 20% today on news China is cracking down (again).

* I hold ungeared positions.

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What's with the 'special' shares?

Special shares usually with high voting rights and often with limited or zero economic rights.

They enable insiders to retain voting control even while they may not actually control the company.

The most well known are the Naspers~N (JSE code: NPN) A shares that give control to a few parties.

Shoprite* (JSE code: SHP) has the same for Christo Wiese which he tried to sell back to the company. But they have zero economic rights and only are votable by Wiese

More recently it surprised many that while Remgro (JSE code: REM) owns a little over 31% of Distell (JSE code: DGH) they ave a pile of B shares that gives them 56% voting control.

In the older days, companies used pyramid structures, but those have long since largely left the JSE and no new ones can be listed.

The challenge is how to know about them? The annual report will detail them.

Generally, they don't matter massively, until they do. And then they matter. Wiese failed to receive the required number of votes to get back onto the Shoprite board in 2018, but then he used his special shares to basically override shareholders.

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