A new Star is born
Steinhoff has published the listing documents for Steinhoff Africa Retail (Star), with the listing to take place on 20 September. The documents are hefty, with two issues standing out for me. First, after the Shoprite* AGM repurchase of former CEO Whitey Basson’s shares, Star now controls just over 50% of Shoprite, and my sense is that they will most definitely be trying to get 100% of Shoprite. In the listing document, Shoprite is discussed almost as much as any of Steinhoff’s other brands, and most likely this potential takeover will be via an offer of Star shares swapped for Shoprite. I like some of the Star assets (Pep and Ackermans), but I own Shoprite because it retails food to low-LSM groups and will likely reject any offer for my shares, as furniture and the like hold no interest for me. The second issue is that current Steinhoff shareholders will not be receiving Star shares. You will continue to have an economic interest in Star, but it will be reduced as Steinhoff switches shares in Star for cash. If you want to keep Star exposure, sell some Steinhoff shares to buy Star shares. Lastly, I have been talking of Steinhoff splitting into Africa and rest of the world for years, and this is the final conclusion, with the only outstanding issue being total ownership of Shoprite. For both local and global investors, it does give a nice clean distinction.