Remgro: Distributing its Tobacco Interests

Author :

Clare Mitchell; Mthuli Ncube

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Wits Business School


Stellenbosch, South Africa




Finance, financial strategy, unbundling


It was December 2009, just over a year since Remgro Limited (Remgro) had completed the distribution of its indirect shareholding in British American Tobacco plc (BAT): 90% of its shares had gone to its shareholders, while the balance of 10% went to a new investment vehicle listed on the Luxembourg Stock Exchange, called Reinet Investments. The shares received by Remgro in Reinet Investments were also distributed to its shareholders. Thys Visser, chief executive officer of Remgro, sat in his Stellenbosch office and reflected upon the transaction, which had resulted in the largest dividend distribution in the corporate history of South Africa. The process had taken approximately two years from start to finish, and Visser concluded that the transaction had been implemented and completed successfully. “Our shareholders got direct access to the asset [BAT shares] and we didn’t sell out – and we found a sustainable solution,” he explained. Remgro’s market capitalisation had dropped by more than half in the process, with the market value of its interest in BAT comprising 52% of Remgro’s last reported net asset value. Visser thought about whether this would require a change in investment strategy for the company. He was not concerned about the reduction in Remgro’s size, recalling that they had shrunk the business when its international assets were split off into Compagnie Financiere Richemont AG (Richemont) in 1988, and once again when technology-driven investments were placed into VenFin Limited in 2000. Remgro had continued to grow on each occasion, despite the restructuring, and he pointed out that it was what you did with your remaining assets that counted.