South African Saltzman family transfers $47 million Dis-Chem shares to executives

Key Points:

Over $47 million in shares transferred to executives in a management retention scheme.
Executives gain options to buy shares, locked-up for 4 years with gradual access over 5 years, aligning their goals with Dis-Chem’s.
Move reflects a trend in South African retail and aims to maintain Dis-Chem’s leadership for continued growth.

In a significant development for Dis-Chem Pharmacies, one of Africa’s leading pharmaceutical retail groups, the South African Saltzman family has transferred shares worth over $47 million to the group’s executives. This is part of a broader strategy to reinforce leadership stability and implement a management retention scheme.

The transaction involved the transfer of 34,940,932 ordinary shares at an average price of R25.33 ($1.34) per share, totaling R885.05 million ($47.08 million). Executed in line with the management retention scheme, the transaction was vendor-financed by the selling shareholder at no cost to the participating executives, which includes new CEO Rui Morais, who took over in July 2023, and seven other senior executives.

Under this arrangement, senior executives, including Rui Morais, received off-market options to buy the shares. Morais can acquire 16.13 million shares worth R408.49 million ($21.72 million), while seven other executives can each acquire about 2.69 million shares valued at R68.08 million ($3.62 million), totaling R476.57 million ($25.35 million). This strategic initiative aims to retain key executives and align their interests with the long-term goals of the company.

South African retail shifts: Family control wanes

The recent sale aligns with a broader trend in the South African retail industry, where founding families reduce their control over companies. Earlier this week, the Ackerman family relinquished control of Pick n Pay, aiming to boost the retailer’s growth.

Dis-Chem’s retention scheme aligns executive financial interests with shareholders’, crucial for maintaining seasoned leadership. Divested shares, now in the Management Retention Scheme, are locked up for 4 years, gradually vesting over the subsequent 5 years. Executives in the scheme can’t access or sell shares for 4 years, followed by incremental access over the next 5 years.

Dis-Chem reports 11.1 percent revenue growth

Founded over four decades ago by Ivan and Lynette Saltzman, Dis-Chem has become one of South Africa’s leading retail healthcare groups. In 2023, the company reported an 11.1 percent increase in full-year revenue to R36.3 billion ($1.92 billion), driven by growth in both wholesale and retail segments.

These transactions emphasize Dis-Chem’s focus on securing a stable leadership team for its next growth phase, maintaining the legacy and vision established by the Saltzmans. This proactive approach aims to solidify its market position and ensure the consistent delivery of strategic objectives, crucial for sustaining long-term growth and shareholder value.