Not convinced of merits
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