Tiger Brands unveils second BEE deal

1 September 2009

South African fast moving consumer goods company Tiger Brands has announced a second black economic empowerment (BEE) deal, under which it will sell a 10% stake in the company, worth about R2.8-billion, to black participants.

“Tiger Brands is firmly committed to BEE in South Africa,” Tiger Brands said in a statement this week.

“The company believes that meaningful participation by black people in the mainstream economy is essential to sustaining South Africa’s economic and democratic structures.”

The cost of the second empowerment transaction to the company is R367.5-million, and equates to 1.4% of the Tiger Brands’ market capitalisation of R25.8-billion on the JSE.

Transaction participants

The participants include the company’s strategic black partners, the Brimstone Investment Corporation, which will hold one percent of Tiger Brands’ enlarged share capital after completion of the transaction, and Mapitso Consortium Investments, also one percent.

For the benefit of employees of the company and its wholly owned subsidiaries, a black managers trust will own 1.56% of the company, while a general staff trust will own 0.44%.

The Thusani Trust, which provides tertiary education assistance to the immediate families of black employees of the group, will hold one percent of the issued share capital.

“It is intended that this trust will be a 100-year trust,” said Tiger Brands.

Tiger Brands Foundation, a newly established trust for the benefit of broad-based regional and community groups, will have a five percent ownership of the group. The foundation is also expected to be a 100-year trust.

Company BEE strategy

According to the company, the transaction is in line with its empowerment strategy, which aims to achieving black ownership, a meaningful number of senior black management at the group, a staff complement that reflects the country’s diverse demographic profile, and procurement policies that recognise empowerment principles.

The company also identified the transfer of skills to black employees, creating a growing and economically active customer base incorporating previously disadvantaged groups in the country, and initiating social development programmes directed at developing and empowering previously disadvantaged, groups as part of this strategy.

Meeting empowerment requirements

The new empowerment builds on the success of the first phase of Tiger Brands’ black economic empowerment strategy, launched in October, when four percent of the group was sold to a broad base of empowerment shareholders, including black managers and other staff, as well as the Thusani Trust.

“EmpowerLogic, an accredited empowerment status verification agency, has conducted an initial scoring of Tiger Brands’ black ownership initiatives in accordance with Code 100 of the BEE Codes,” said Tiger Brands.

“It is estimated that, after implementation of the Phase II BEE transaction, Tiger Brands will have an effective black ownership of approximately 30%, if mandated investments and foreign operations, as defined in the BEE Codes, are excluded from Tiger Brands’ enlarged issued share capital.”

The transaction is subject to the approval of Tiger Brands’ shareholders and the necessary regulatory approvals.

SAinfo reporter

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