Ackerman Family Cuts Voting Power to Lure Investors

The Ackerman family, who own Pick ‘n Pay, is decreasing their voting power to attract new investors and support the struggling shop.

According to CEO Sean Summers, Ackerman Investment Holdings, the family’s holding company, would lower its voting influence in Pick ‘n Pay Stores to less than 50% after completing a scheduled rights offer. The adjustment aims to enhance how the company is seen by outsiders.

The Ackerman family is not alone in preserving control over their business. Mark Zuckerberg of Meta Platforms and Alphabet’s founders have significant control over their companies thanks to dual-class shares that give them more voting rights. This arrangement, which is frequently criticized by investors for generating corporate governance concerns, is comparable to the way Johann Rupert, South Africa’s richest man, runs Richemont.

“The dismal performance of Pick ‘n Pay over the past decade demonstrates that family control is not always a good idea. According to Shane Watkins, chief investment officer of All Weather Capital Pty, control structures can lead to catastrophic implications if key decisions are made by a single individual.

Pick ‘n Pay’s stock has dropped 30% in the last year, while larger rival Shoprite Holdings has risen 31%. Additionally, Pick ‘n Pay announced its first annual deficit for the fiscal year ended February 25. Summers, who was rehired as CEO last year, has a three-year recovery strategy that involves selling shares in the Boxer unit for up to R8 billion ($446 million) and raising R4 billion ($223 million) through a rights offering.

“The balance sheet was completely upside down, with a funding structure that was patently against us,” Summers, who is 70, added. Still, Pick ‘n Pay completed its inaugural investor roadshow for Boxer last week, and “the response has been phenomenal,” he said.

During South Africa’s apartheid-era isolation, founders wielded more voting power. However, this is changing as other tycoons hand over management of the enterprises they built.

Ivan Saltzman, co-founder and CEO of Dis-Chem Pharmacies, sold some of the family’s shares in 2021 to increase liquidity and retain key executives.

Christo Wiese utilized extra voting shares to win re-election as Shoprite chairman in 2019. Although he resigned a year later, he remains on the board despite selling shares after losing almost R59 billion when Steinhoff International Holdings NV failed in 2017.

“A lot of our family owners in South Africa overstay their welcome,” said David Shapiro, chief global equities strategist at Sasfin Securities with over 50 years of expertise on Johannesburg’s exchange. “Though to actually move out is a very difficult decision to make.” Wiese has claimed that when major decisions must be taken, a significant stakeholder is required, and that “you don’t just parachute people in.”

Stephen Saad, founder and CEO of Aspen Pharmacare Holdings, agrees. He has been instrumental in transforming Aspen into Africa’s largest drugmaker. He is Aspen’s single largest individual stakeholder, owning around 13% of the company’s stock, but does not control it through special voting shares.

Pick ‘n Pay’s new structure aims to attract investors, but the business will remain intimately tied with its founding family. “Pick ‘n Pay is inextricably linked to the Ackermans for those that have an itch or irritation with the control structures, I say, Pick ‘n Pay without the Ackermans is worse off,” Summers told the media.

Established in 1967, Pick ‘n Pay is South Africa’s second-largest retailer. The Ackerman family, recognized for their riches and extensive assets, owns a significant 25.53 percent stake in Pick ‘n Pay, which equates to 124,677,238 shares.

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