Shoprite's long time chairman Wiese steps down under pressure from board, shareholders

JOHANNESBURG, Nov 15 (Reuters) - The chairman of South African grocery giant Shoprite, Christo Wiese, stepped down on Friday after nearly three decades at the helm, giving into growing pressure from investors and the firm's board which wanted to dampen his influence.

The investors and the board were keen to simplify the company's structure following high-profile corporate governance failures at a clutch of South African firms, the most notable of which was a $7 billion accounting fraud at furniture retailer Steinhoff, where Wiese was also chairman and a majority shareholder.

"The Board is of the view that, in line with good corporate governance, the next Group Chairperson should be independent, a view supported by Dr Wiese," Shoprite said in a statement.

Earlier this year, Shoprite's board attempted to buy back deferred shares held by Wiese in an investment vehicle.

The scheme, which ultimately failed to secure enough support from shareholders because of the high cost -- an expected one-off reduction in earnings of about 3.3 billion rand ($223 million) based on the share price at the time -- would have significantly curbed his influence in the company he helped turn into an African powerhouse.

The Johannesburg Stock Exchange (JSE) has also been tightening its corporate governance regulations, shining the spotlight on Wiese's role as Shoprite's chairman and majority shareholder.

In 2017 Wiese pushed for a tie-up between Shoprite and Steinhoff that would have created a multi-billion dollar African retail giant but shareholder opposition and regulatory hurdles scuppered the plan.

Wiese in 2018 filed a $5 billion lawsuit against Steinhoff to claw back a 2016 capital injection he made to help the firm pay debt and fund the acquisition of the U.S. company Mattress Firm.

Shoprite continued to show its ability to weather economic downturns, with quarterly results last week showing it managed a 7.3% rise in revenue as shoppers turned to its discount unit USave.

($1 = 14.8839 rand) (Reporting by Mfuneko Toyana; Editing by Kirsten Donovan)

2019-11-15 18:49:20

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