Steinhoff bags Pepkor for R63bn
STEINHOFF’S snatching of Pepkor group in a R62.8 billion deal was yesterday described as anything between a fairytale, perfect fit and common sense by the Steinhoff chief executive, Markus Jooste, but the most apt was that it would put both the companies in the top ten retailers in the world.
Jooste said Steinhoff ’s decision to acquire 92.34 percent of Pepkor Group was not easy but made sense as the group looked at growing international discount segment.
“Here are again these two companies both built from South Africa, managed from here and driven from here that can now play in the top 10 retailers in the world,” said Jooste. “It is a fairytale story.”
Asked where the deal put South Africa business capabilities in the global picture, Jooste said he had personally always been proud of SABMiller for becoming leaders in its field from a South African base.
Steinhoff intends acquiring Titan Premier Investments’ effective equity interest in Pepkor of 52.4 percent, 37.06 percent from Brait and 2.81 percent from Pepkor management. Brait will sell its stake for R26.4bn which will be settled in cash and shares.
Businessman Christo Wiese is the ultimate controlling shareholder of Titan.
Should the deal proceed, the Wiese family will now own about 20 percent of Steinhoff, Brait will own about 6 percent and Jooste family 65 million shares in the company.
Wiese was believed to be also eying some of Ellerines stores belonging to African Bank Investment Limited.
The deal will also give some weight to Steinhoff European operations ahead of its listing on the Frankfurt Stock Exchange in the second quarter of next year.
The transaction values Pepkor at R68bn. Founded in 1965,
It would also enhance our positioning in terms of size and waiting in the ducks in Frankfurt…
the group owns more than 6 000 stores globally with sales of more than R155bn.
“This transaction increases the company’s market capitalisation substantially because of the huge increase in capital this deal brings about. It would also enhance our positioning in terms of size and waiting in the ducks in Frankfurt which is a positive,” he said.
Pepkor and Steinhoff also shared a vision to be the world player in the discount market.
Steinhoff is very strong in the furniture and household goods sides while Pepkor is strong on apparel and household goods.
Jean Pierre Verster, an equity analyst at 36ONE Asset Management, said through this deal both Pepkor and Steinhoff would benefit from combined sourcing of products from south-east Asia and eastern Europe. He added that both companies had operations not only in South Africa but also in Poland and other eastern European countries.
Steinhoff ’s shares gained 4.5 percent to R58.49.