Allan Gray supports significantly amended Shoprite Offer

Brait has substantially revised the terms of the offer for Shoprite which was announced on 24 November 2006. In terms of the revised transaction, shareholders who acquired shares prior to the 24th November will be able to continue to participate in Shoprite via a new listed entity. In addition the offer price has been raised from R26 to R28 per Shoprite share.

Allan Gray, acting on behalf of its clients, objected to the previously announced transaction. This objection was primarily driven by the structure of the transaction, in terms of which many shareholders (such as Unit Trust investors and certain pension fund clients), who were effectively disenfranchised, were forced to take a cash offer without the ability to remain invested in Shoprite.

Should the revised transaction proceed, Shoprite shareholders will now have the ability to remain invested in the business via a listed vehicle and should they wish, continue to benefit from the growth prospects and a more appropriate capital structure of the business. Should they wish to exit, they will receive a more favourable price for their shares.

Specifically in terms of the previous structure of the transaction shareholders, who in Allan Grays opinion were potentially standing to benefit from the transaction to a greater extent than all shareholders, were also able to exercise all their votes to approve the transaction. This created a situation of potential conflict of interests. The revised transaction terms now provide essentially for equal treatment of all shareholders as certain groupings of shareholders are no longer being effectively forced out of their investment in Shoprite.

Should the proposed transaction be implemented as envisaged, including the satisfactory implementation of the new listed entity structure, we will support the transaction.