Not con­vinced of mer­its

Finweek English Edition - - MARKETPLACE -

The big news story over the hol­i­days was the pro­posed Stein­hoff*/Sho­prite* deal of sorts. I say “of sorts” as we do not have any fi­nal de­tails, but the plan as pub­lished on Sens sug­gests a pur­chase of Stein­hoff’s African re­tail as­sets by Sho­prite in ex­change for Sho­prite shares. The deal is sup­ported by the two ma­jor­ity share­hold­ers (the PIC and Christo Wiese) and would cre­ate a mas­sive African re­tail busi­ness.

As a long-term holder in Sho­prite (Stein­hoff is a trad­ing po­si­tion, not an in­vest­ment), I am not 100% con­vinced. Yes, it will cre­ate a huge busi­ness, but I am not ex­cited by the in­clu­sion of JD Group and want to see the price be­ing paid. JD Group was hav­ing a very tough time be­fore it was fi­nally delisted by Stein­hoff. Fur­ther, JD Group de­rives its in­come from an old-school model – from the as­so­ci­ated fi­nan­cial ser­vices as much as the ac­tual sell­ing of prod­ucts – some­thing that I don’t like and think is a sus­pect busi­ness model. That said, Pep­kor Africa is a great as­set and I may sup­port the deal by tak­ing the view that not ev­ery deal is per­fect, but most im­por­tantly, I need to see the val­u­a­tions be­ing used.

I am not ex­cited by the

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