A new Star is born

Finweek English Edition - - Marketplace -

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.

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