R63bn Pepkor deal triggers ‘insider trading’ probe

2014-12-01 12:26

The JSE’s surveillance unit is probing last week’s deal between Steinhoff and Pepkor management, said to be the biggest corporate takeover in 10 years, for possible insider trading following a series of trades just before the first cautionary announcement from investment holding company Brait.

A cautionary announcement warns investors to exercise caution when dealing in a company’s securities. It is usually issued when a company enters into negotiations which may have a material effect on its share price if successful.

Steinhoff, the furniture retailer, said on Tuesday it would buy Brait’s stake in discount clothing retailer Pepkor – along with those of its management and chairperson Christo Wiese – for R62.8 billion.

“We are looking into this matter and if we find evidence of insider trading, we will forward our findings to the directorate of market abuse at the Financial Services Board,” Peter Redman, senior technical adviser at the bourse’s surveillance department, told City Press.

According to Steinhoff’s JSE filings on directors’ dealings, between September 9 and 18 – the day before Brait issued a cautionary announcement – Steinhoff directors and their associates traded shares and single stock futures in the company collectively worth more than R146.4 million.

Nonexecutive directors Bruno Steinhoff and Christo Wiese accounted for the largest chunk of these trades at R55.3 million and R53.2 million respectively.

It has paid off handsomely.

Between the date of the first trade and the day before the deal with Pepkor was announced, the Steinhoff share swung between R52.70 and R55.97, according to Bloomberg data.

On Tuesday, the share closed at R58.49. For Bruno Steinhoff, this equated to a R1.7 million return or profit, because he had bought 218 187 shares for R11.2 million on September 9.

He made R4.1 million on his larger block of shares bought on September 16.?

By lunchtime on Friday, the Steinhoff share had risen to R58.98.

Solly Keetse, who heads the Financial Services Board’s Directorate of Market Abuse, said it was not currently investigating the trades but would check with the JSE’s surveillance department and decide whether to investigate.?

Wiese and Steinhoff did not respond to requests for comment on the trades.

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