The Shoprite Group is issuing R8.9 billion worth of Shoprite Checkers shares to its employees through a new black economic empowerment (BEE) trust, effectively increasing black ownership in the subsidiary to 19.2%.
The 40 million Shoprite Checkers shares will be "for the benefit of its employees to recognise their valued contribution and ensure their ongoing participation in the Shoprite Group’s continued growth and success," the group said on Tuesday morning.
At least 126 000 South African employees are expected to benefit from the Shoprite Employee Trust. About 16 000 non-South African will receive "equivalent benefits through their respective payroll".
The Shoprite Checkers dividends will be linked to Shoprite Holdings dividends per share. The group said this was so that employees recognise the benefits of the group as whole achieving strong results.
"The transaction is intended to retain, motivate and incentivise the employees of the Shoprite Group to continue to contribute towards its success going forward," the group said.
"The transaction represents a material step that has been taken in strengthening the relationship between the Shoprite Group and its employees for the benefit of the Shoprite Group."
Shoprite Checkers will provide a R888 million contribution for the subscription of 10% of the shares for the trust, and will fund the balance of shares on a notional basis.
There will also be initial distribution of R77 million for the six months to 2 January for eligible South African and non-South African employees.
The group expects the transaction will reduce its earnings by around 2.7%, and said it will not have an impact on Shoprite Holdings shares.