Pick n Pay rights offer receives massive shareholder support, hailed a ‘resounding success’

Pick n Pay’s R4-billion rights offer has received overwhelming support from shareholders. 

In a media announcement on Monday, the retailer said the rights offer was 106% oversubscribed with total subscriptions reaching R8.3-billion.

Most shareholders — 98.7% — opted to follow their rights.

The funds raised will be used to strengthen Pick n Pay’s balance sheet and support its core business turnaround.

The rights offer, which closed on 2 August 2024, consisted of 252,206,809 new Pick n Pay ordinary shares (“rights offer shares”) costing R15.86 per share. The offer was fully underwritten by Absa, Rand Merchant Bank and Standard Bank, although due to overwhelming demand the banks were not required to fulfil their underwriting obligations.

The rights offer went live on 17 July, causing the share price to plunge by 17% within an hour in a market correction.

It was oversubscribed by 270,446,006 shares. Rights offer shares have been distributed to eligible shareholders. A total of 3,246,206 additional shares were allocated to qualifying shareholders on a pro-rata basis. Refunds for unsuccessful excess applications will be processed on or about the same date.

In the company statement, PnP said the proceeds from the rights offer would be used to reduce debt, strengthen its financial position, and fuel its turnaround strategy. 

This recapitalisation is a key part of the company’s six-point strategic plan to revitalise its core business, while continuing to grow its successful Boxer and Clothing divisions. 

On 27 May,  the retailer – which was once the market leader – posted a full-year loss after tax of R3.19-billion. PnP’s founders, the Ackerman family, announced that they would relinquish control of the retail giant, almost 60 years after Raymond Ackerman established the retailer, and follow their rights.

Gareth Ackerman, the chairperson of PnP, would also be stepping down after 14 years in the position.

PnP has introduced a new leadership team and operational structure, which it said was already driving positive change in its core business. A key component of the turnaround is the separate listing of its Boxer discount chain on the JSE later this year, through which the group is aiming to raise up to R8-billion.

PnP CEO Sean Summers said they were pleased with the result. 

“The successful conclusion of the rights offer demonstrates the market’s strong confidence in our iconic brand and in our turnaround strategy. It marks a crucial first step in our recapitalisation plan, positioning the group well to fund long-term sustainable growth. 

“We can now intensify our focus on our core Pick n Pay retail business. This achievement underscores our commitment to executing our strategy. We appreciate this incredible support from our shareholders.” DM