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DIS-CHEM PHARMACIES LIMITED - Divestment Of A Stake By Way Of An Accelerated Bookbuild, Management Retention Scheme And Potential BEE Transaction

Release Date: 24/08/2021 17:30
Code(s): DCP     PDF:  
Wrap Text
Divestment Of A Stake By Way Of An Accelerated Bookbuild, Management Retention Scheme And Potential BEE Transaction

DIS-CHEM PHARMACIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/009766/06)
JSE share code: DCP
ISIN: ZAE000227831
(“Dis-Chem” or the “Company”)


ANNOUNCEMENT IN RELATION TO THE DIVESTMENT OF A STAKE BY WAY OF AN ACCELERATED
BOOKBUILD, MANAGEMENT RETENTION SCHEME AND BLACK ECONOMIC EMPOWERMENT
TRANSACTION

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE
UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH IT IS
UNLAWFUL TO DO SO.

The Saltzman family has elected to sell a portion of its current shareholding in Dis-Chem through its
shareholding vehicle, Ivlyn Local Investment Holdings Proprietary Limited (“Ivlyn” or the “Selling
Shareholder”). Subject to acceptable pricing being achieved, Ivlyn intends to sell 64,506,336 Dis-Chem
ordinary shares (“Bookbuild Shares”), representing 7.50% of Dis-Chem’s issued share capital, via an
accelerated bookbuild offering (the “Bookbuild”).

In addition to the Bookbuild, the Selling Shareholder also announces its commitment to divest up to
32,253,168 Dis-Chem ordinary shares, representing up to 3.75% of Dis-Chem’s issued share capital, to
a select number of key senior executives who are central to the delivery of the Company’s strategic
priorities. Included in this group is Mr. Rui Morais, current CFO who has also been approved by the
nomination committee as successor to CEO, Ivan Saltzman (the “Management Retention Scheme”).
The Management Retention Scheme will be vendor-financed by the Selling Shareholder at no cost to
Dis-Chem, and participating management are to be subject to a 10-year lock-up. It is anticipated that
the details of the Management Retention Scheme will be negotiated during Dis-Chem’s closed period,
with final details and closing announced alongside the publication of the Company’s interim results in
November. The Bookbuild and Management Retention Scheme, are hereafter collectively referred to
as the “Transaction”.

Investors are also notified that the Selling Shareholder has entered into a share sale agreement with
a consortium of BEE investors (the “BEE Consortium”) in terms of which the Selling Shareholder has
conditionally agreed in terms of a written share purchase agreement to sell a further 86,468,741 Dis-
Chem ordinary shares, representing 10.05% of Dis-Chem’s issued share capital to the BEE Consortium
(the “BEE Tranche”). The BEE Tranche, while agreed in principle, is still subject to the fulfilment of
certain conditions, including final approval by one of the BEE Consortium members and the conclusion
of associated financing agreements by 31 August 2021. If the conditions are fulfilled by 31 August and
the transaction proceeds, a detailed announcement will be issued by the Company. Should the
conditions not be fulfilled by the 31 August for any reason, there is no certainty that the BEE Tranche
will be concluded in its current form, or at all.

Subsequent to the Transaction, the Saltzman family will own approximately 41.5% of Dis-Chem’s
issued share capital. Should the BEE Tranche become unconditional by 31 August and therefore be
implemented, the Saltzman family’s shareholding will be reduced further to approximately 31.4% of
Dis-Chem’s issued share capital. The Selling Shareholder has agreed to a lock up of 360 days on its
remaining holding, subject to customary exceptions.

Reflecting on the Transaction, Ivan Saltzman, Dis-Chem CEO commented, “We are pleased to
announce today’s transactions, which we see as meeting a number of strategic objectives, including
the provision of greater liquidity in the trading of Dis-Chem shares and taking proactive steps to
incentivise and retain important executives who are key to the delivery of the long-term strategic
objectives of our group. Should we succeed in closing the BEE transaction, we will also have introduced
high quality BEE shareholders into our business, which we believe will deliver significant benefit to our
operational and financial performance going forward. Whilst these transactions reduce our
shareholding, we remain the single largest shareholder, and are committed to Dis-Chem through our
ongoing executive leadership roles. Further, as a signal of our enduring commitment, we have agreed
to an extended lock-up on our remaining shareholding.”

The Bookbuild is being offered to qualifying investors only (as set out in greater detail in the disclaimer
below) and will not be offered to the public in any jurisdiction. Participation in the Bookbuild is
reserved for invited investors only and subject to the terms and conditions provided to the invited
investors.

Pricing and allocations will be announced as soon as is reasonably practicable following the closing of
the Bookbuild.

The Bookbuild is now open and the Selling Shareholder reserves the right to close it at any time.

Pursuant to a placement agreement entered into with the Selling Shareholder, Goldman Sachs
International, Investec Bank Limited and The Standard Bank of South Africa Limited, are acting as joint
bookrunners (the “Joint Bookrunners”) in relation to the Bookbuild.


Midrand
Tuesday, 24 August 2021

Joint Bookrunner
Investec Bank Limited

Joint Bookrunner
Goldman Sachs International

Joint Bookrunner and Transaction Sponsor
The Standard Bank of South Africa Limited

South African legal counsel to Dis-Chem and the Selling Shareholder
Bowman Gilfillan Inc.

International legal counsel to the Selling Shareholder
Davis Polk & Wardwell London LLP
DISCLAIMER

NOT FOR DISTRIBUTION IN THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA, OR ANY OTHER
JURISDICTION IN WHICH IT IS UNLAWFUL TO DO SO.

This announcement is not for publication or distribution, directly or indirectly, in or into the United
States including its territories and possessions, any State of the United States and the District of
Columbia (the “United States”),Australia, Canada or Japan. The distribution of this announcement may
be restricted by law in certain jurisdictions and persons into whose possession any document or other
information referred to herein comes should inform themselves about and observe any such
restriction. Any failure to comply with these restrictions may constitute a violation of the securities
laws of any such jurisdiction.

This announcement is for information purposes only and does not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities to any person in the United States, Australia,
Canada or Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The
Bookbuild Shares may not be offered to the public in any jurisdiction in circumstances which would
require the preparation or registration of any offering document relating to the Bookbuild in such
jurisdiction. The securities referred to herein (the “Shares”) may not be offered or sold in the United
States unless registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act. The Shares being offered and sold in the United States only to a limited number of
“qualified institutional buyers” (“QIBs”) in reliance on Rule 144A under the Securities Act or another
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act,
and are being sold outside the United States in offshore transactions in accordance with Regulation S
under the Securities Act. The Shares may not be offered to the public in the United States. The offer
and sale of the Shares has not been, and will not be, registered under the Securities Act or under the
applicable securities laws of Australia, Canada or Japan. Subject to certain exceptions, the Shares
referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account
or benefit of, any national, resident or citizen of Australia, Canada or Japan. There will be no public
offer of Shares in the United States, Canada, Australia and Japan.

This announcement does not constitute or form a part of any offer or solicitation or advertisement to
purchase and/or subscribe for Shares in South Africa, including an offer to the public for the sale of,
or subscription for, or the solicitation of an offer to buy and/or subscribe for, shares as defined in the
South African Companies Act, 2008 (“the South African Companies Act”) and will not be distributed to
any person in South Africa in any manner that could be construed as an offer to the public in terms of
the South African Companies Act. This announcement does not, nor is it intended to constitute a
“registered prospectus” as contemplated in the South African Companies Act.

In South Africa the Bookbuild will not be an offer to the public as defined in the South African
Companies Act and only (i) persons falling within the exemptions set out in section 96(1)(a) or (ii)
persons who subscribe, as principal, for shares at a total contemplated acquisition cost equal to or
greater than R1 000, 000, as envisaged in section 96(1)(b), of the South African Companies Act, and in
each case to whom any offer to participate in the Bookbuild is specifically addressed (all such persons
in (i) and (ii) being referred to as “relevant persons”), will be entitled to apply for Shares in the
Bookbuild. Any investment activity to which this announcement relates will only be available to, and
will only be engaged with, relevant persons. Any person who is not a relevant person should not act
on this announcement or any of its contents. This announcement does not, nor does it intend to,
constitute any offering document relating to the Bookbuild.
The information contained in this announcement constitutes factual information as contemplated in
section 1(3)(a) of the South African Financial Advisory and Intermediary Services Act, 2002 ("FAIS Act")
and should not be construed as an express or implied recommendation, guide or proposal that any
particular transaction in respect of the Shares or in relation to the business or future investments of
the Company, is appropriate to the particular investment objectives, financial situations or needs of a
prospective investor, and nothing in this announcement should be construed as constituting the
canvassing for, or marketing or advertising of, financial services in South Africa. The Company is not a
financial services provider licensed as such under the FAIS Act.

In member states of the European Economic Area this announcement and any offer if made
subsequently is directed only at persons who are “qualified investors” within the meaning of the
Prospectus Regulation. For these purposes, the expression “Prospectus Regulation” means Regulation
(EU) 2017/1129, as amended. In the United Kingdom this announcement and any offer if made
subsequently is directed only at “qualified investors” within the meaning of the UK Prospectus
Regulation (i) who have professional experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as
amended (the “Order”) or (ii) who fall within Article 49(2)(A) to(D) of the Order, and (iii) to whom it
may otherwise lawfully be communicated, and any investment activity to which it relates will only be
engaged in with such persons and it should not be relied on by anyone other than such persons. For
these purposes, the expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it
forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018,
as amended.
Each of Goldman Sachs, Investec and Standard Bank is acting exclusively for the Selling Shareholder
and no-one else in connection with the Bookbuild. They will not regard any other person as their
respective clients in relation to the Bookbuild and will not be responsible to anyone other than the
Selling Shareholder for providing the protections afforded to their respective clients, nor for providing
advice in relation to the Bookbuild, the contents of this announcement or any transaction,
arrangement or other matter referred to herein. Goldman Sachs is authorized by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom.

None of Goldman Sachs, Investec and Standard Bank or any of their respective directors, officers,
employees, advisers or agents makes any representation or warranty, express or implied, as to the
accuracy, completeness or verification of the information set forth in this announcement, and nothing
contained in this announcement is, or shall be relied upon as, a promise or representation in this
respect, whether as to the past or the future. None of Goldman Sachs, Investec and Standard Bank or
any of their respective directors, officers, employees, advisers or agents accepts any responsibility for
its accuracy, completeness or verification and, accordingly, disclaim, to the fullest extent permitted by
applicable law, any and all liability which they might otherwise be found to have in respect of this
announcement or any such statement.

This announcement includes "forward-looking statements" within the meaning of the "safe harbour"
provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as "target", "will", "forecast", "expect",
"potential", "intend", "estimate", "anticipate", "can" and other similar expressions that predict or
indicate future events or trends or that are not statements of historical matters. The forward-looking
statements set out in this announcement involve a number of known and unknown risks, uncertainties
and other factors, many of which are difficult to predict and generally beyond the control of the
Company and Selling Shareholder, that could cause the Company's actual results and outcomes to be
materially different from historical results or from any future results expressed or implied by such
forward-looking statements. These forward-looking statements speak only as of the date of this
announcement. The Company undertakes no obligation to update publicly or release any revisions to
these forward-looking statements to reflect events or circumstances after the date of this
announcement or to reflect the occurrence of unanticipated events, save as required by applicable
law.

Date: 24-08-2021 05:30:00
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