THE SPAR share price debuted in the non-cyclical services - food and drug retailers sector of the JSE Securities Exchange at R22,00 today.
The price moved within a tight range and by mid afternoon was trading around R20,50 – translating into a market capitalisation of R3.46-billion. More than 1.2 million shares had traded by mid-afternoon.
One of the most eagerly anticipated listings on the JSE Securities Exchange this year, Spar has been unbundled from its former 100% owner, Tiger Brands, with each Tiger shareholder receiving one Spar share for one Tiger share.
The main objectives of the separate listing were to increase focus in Tiger, which is a manufacturer of foods and medicines, and in Spar, which is a wholesale distributor to 764 retail stores which are independently owned.
The listed entity is actually a wholesaler with six large distribution centres, and the 764 stores together with the distribution centres form a voluntary trading organisation.
The separate listing was also designed to unlock value for Tiger Brands shareholders and to remove the perception of any conflict of interest between Tiger Brands and its three largest customers, Pick `n Pay, Shoprite and Spar.
By mid afternoon the Tiger Brands share price was trading at R82,45, giving it a market capitalisation of R13.9-billion. In May, on the day the listing of Spar was first announced, Tiger Brands` market capitalisation was approximately R14.9-billion - so, assuming other things equal, the unbundling of Spar has unlocked some R2,5-billion in value for Tiger Brands shareholders.
The mid afternoon price puts Spar on an historic PE of 13.3x.
The listing will reduce the turnover of Tiger Brands by some 40% but is expected to increase its operating margin. In the prospectus, Spar forecast turnover to grow 17,9% to R11,9-billion in the year to September 2004 and headline earnings were forecast to grow 7% to R278,8-million.
Tiger Brands CEO Nick Dennis said: “The opening price was gratifying. The unbundling has unlocked value and improved focus of both companies.”
Spar Chief Executive Peter Hughes said: “The Spar management is optimistic about the future of Spar as a listed company and we are confident that Spar will help deliver the extra value for shareholders.”
Ends…
Note to editor: All calculations based of trading price of share at 15h00.
Issued by: Meropa Communications
Contact: Graeme Coetzee
Tel: 011 772 1061
On behalf of: The SPAR Group Limited
Contact: Peter Hughes (Chief Executive) or Rodney Coe (Financial Director)
Tel: 031 719 1900
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
