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Saltzman family selling off the family silver at Dis-Chem

| On the move

By: Edward West – Business Report

The Saltzman family that founded Dis-Chem Pharmacies have sold properties and shares in the group worth about R15 billion last week.

The group said on Friday that an independent professional expert had found its R478.6 million purchase of Columbia Falls, a property company that houses the group’s Midrand distribution centre and head office, from a trust controlled by the Saltzman’s, was fair.

This sale followed hard on the heels of the sale last week by founder Ivan Saltzman of 50 million shares in Dis-Chem for about R1.42bn, while his son, Saul Satzman, also sold 3 million shares for R87.9m.

Dis-Chem is a leading retail pharmacy group in South Africa that was co-founded in 1978 by pharmacists husband and wife Ivan and Lynette Saltzman. The company was listed on the JSE in 2016, shortly after opening its 100th store. It has a market cap of R25.9bn and the share closed 1.5% higher at R30.45 on Friday.

In the meantime, Coronation Asset Management has since become the largest shareholder in Dis-Chem, with a 29.8% stake. Last November, the Public Investment Corporation increased its interest in the pharmaceutical group to 10.02% from 9.85%.

Dis-Chem said on Friday the properties it purchased from The Directors Adventures Trust, currently earns a monthly rental from the group. Dis-Chem (and related entities) pays about R3.7m per month in rent, equating to R47m annually. BDO Corporate Finance (BDO) was the appointed independent professional expert on the property sale.

The Directors Adventures Trust comprises Saltzman family members who control 35.75% of the shares of the group, and Dis-Chem directors Stan Goetsch, Brian Epstein and Kevin Sterling. Saltzman family members control 78% of the shares of the trust.

Dis-Chem’s revenue rose 9.4% to R17.9bn in the six months to end August, or just more than 10% when excluding the effect of Covid-19 vaccines in the prior period.

But headline earnings fell about 17% to just under R500m, with margins under pressure in personal care and beauty as the retailer picked up its promotional activity.

The independent valuation had valued the land and buildings in the related party transaction at R650.22m.

Courting controversy

Last year Dis-Chem said it was looking to a new era as it announced that Ivan Saltzman would step down as CEO at the end of June, 2023 and Rui Morais was appointed as CEO in July 2023.

Ivan Saltzman in 2022 was in the public spotlight after a controversial memo on the hiring of white applicants at Dis-Chem was leaked in 2022, leading the pharmacy to face a major backlash and cost it millions in lost revenue.

The controversial memo, written by Saltzman in October 2022 said that Dis-Chem would not appoint or promote any white person within the group.

Social media speculation on x goes wild

General TD (@shakazulubrnrv3) posted, “Saltzman’s have cashed out ~R1.5bn worth of stock. Dis-C0hem did a BEE transaction in 2021, anchored by RBH. BEE deals are basically like call options. The deal had a strike price of R26.05, only exercisable after Aug 2024. At the current share price, it’s in the money.” ...“ I wonder what the RBH (Royal Bafokeng Holdings) BEE consortium thinks of this.”

General TD was referring to Dis-Chem’s R2.3bn black economic empowerment deal in 2021, in which it sold a 10% stake to a group of black investors, including RBH.

Ndzavi Derrick .CBA (@NdzaviDerrick) posted, “The Founder and outgoing CEO of Dis-Chem, Ivan Saltzman, sold R1. 4bn of shares, while his son Saul sold R87. 9m of shares. This reduces the Saltzman family's stake in the business to 29.31% from 35.12%.”

Ntsika Mzananda (@NtsikaAMzananda) posted, “I think this could be them moving funds into a new or other business business. Obviously that's to add another stream of serious income. That also could mean they want to soften the blow if things go south at Dis-Chem.”

BUSINESS REPORT


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