SABMiller won't speak on Edcon equity talk
May 13, 2004
By Ann Crotty
Johannesburg - SABMiller would not comment yesterday on speculation that its 20 percent stake in Edgars Consolidated Stores (Edcon) could be involved in an equity-based black empowerment transaction.
A spokesperson for the group said that as Edcon and SABMiller were both listed and as SABMiller was due to release its financial results for 2004 next week, it would not be appropriate to make any comment.
Edcon chief executive Steven Ross said that any plans SABMiller might have for its stake would have to be referred to the beer group.
Ross said a transformation committee had been set up at board level and was addressing the issue of black economic empowerment from four perspectives - employment equity; corporate social responsibility; procurement from black-owned businesses; and equity ownership by a black empowerment group.
At Edcon's market price of around R130, SABMiller's stake would be worth just under R1.5 billion.
Although SABMiller is still the largest single shareholder, until the late 1990s it held control of Edcon with a stake of over 65 percent.
The bulk of this was sold off as part of the beer group's move to the London Stock Exchange. This move included a bid to streamline its activities to beer and soft drinks.
The sale of those shares was achieved at prices that were considerably lower than the trading range of recent months. Although Edcon does not rate a mention in the SABMiller annual report, it is likely that SABMiller management was keen to hold on to the shares until they had recovered to the sort of levels seen in the mid-1990s. They are currently back at those levels.
One analyst said yesterday that it would make sense for SABMiller to dispose of this investment, particularly if it could do so at a reasonably attractive price and in a transaction that involved black empowerment.
It was also noted that Edcon held 10 percent of its equity as treasury stock, which could be available for a empowerment deal.
Edcon gained R3.75 to R138.50 and the sector gained 0.85 percent. SABMiller lost 14c to R72.61 while the sector lost 0.18 percent.
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