Why a Shophoff or a Stein­rite could make sense

Finweek English Edition - - Techtrends -

AT FIRST GLANCE, in­vestors will prob­a­bly won­der what Shoprite would want to do with Stein­hoff, or the other way around. But there would be many op­por­tu­ni­ties. Shoprite is slowly in the process of en­ter­ing fur­ni­ture re­tail­ing with, among oth­ers, its OK Fur­ni­ture brand and its own House and Home. This divi­sion, which al­ready ac­counts for 13% of the group’s turnover, could soar af­ter a merger.

The larger Shoprite/Stein­hoff would of­fer a bet­ter bal­ance than the two are achiev­ing sep­a­rately. Stein­hoff’s more than 50% ex­po­sure to for­eign in­come is too high. Shoprite, on the other hand, is too small out­side Africa. Com­bined it would be an in­come of be­tween 30% and 40%, a large por­tion of which would be from emerg­ing mar­kets. Once again, that’s a fig­ure that would suit in­vestors.

Smaller syn­er­gies, like Stein­hoff’s Uni­trans, which has al­ready been suc­cess­ful with lo­gis­tics in Africa and in emerg­ing mar­kets in Europe, and Shoprite’s need for many tons of goods to be trans­ported daily all show that one large one makes sense.

If you look at the two an­nual re­ports, you see many other sim­i­lar op­por­tu­ni­ties. Stein­hoff spe­cialises in ex­pand­ing and strength­en­ing the ac­qui­si­tion chain. Whitey Bas­son, on the other hand, knows how to sell.

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