Pepkor DIY retail chain goes for R1.2bn
Retail giant Pepkor Holdings has found another way to offload its DIY and timber retail business, The Building Company (TBCo), in a R1.2 billion deal announced yesterday.
It has opted for the private equity sale route for the subsidiary, confirming Capitalworks Private Equity and selected members of TBCo management are the purchasers of the business.
This follows Pepkor trying to sell the unit to Cashbuild a few years ago. However, that sale was scuppered by SA competition authorities not giving the deal the green light.
Pepkor, which owns major retail brands like Pep and Ackermans and furniture, tech and appliance retail company JD Group, has been trying to offload TBCo for years. TBCo owns the BUCO chain of DIY and hardware stores and Timber City outlets in the country.
It is a relatively small subsidiary in the Pepkor group and competes with Cashbuild, Massmart-owned Builders Warehouse, Spar Group’s Buildit chain and more recently French DIY retail group Leroy Merlin, which entered the South African market in 2018.
“Pepkor shareholders and noteholders are hereby advised that the company has entered into a sale agreement with respect to the disposal of the entire share capital of Pepkor’s wholly-owned subsidiary, TBCo, for a purchase consideration of circa R1.2 billion to Capitalworks Private Equity and selected members of TBCo management,” the group said in a voluntary Sens announcement.
“The proposed transaction is subject to the conditions precedent,” it added.
Sale rationale
“TBCo has continued to expand its value proposition, which includes an attractive portfolio of well-known brands, under Pepkor’s ownership, while refining its strategy and consolidating its operational structure,” Pepkor noted.
“The disposal of TBCo will streamline Pepkor’s portfolio of businesses, enhancing the group’s return on capital and optimising shareholder returns.
“Following the proposed transaction, TBCo will be well-positioned strategically and operationally to pursue growth,” it said.