Steinhoff exercises its call options for Shoprite
AFRICA’S biggest food retailer, Shoprite, on Friday confirmed that Steinhoff Africa Retail (Star) had exercised the call options to acquire a 23.1 percent economic stake in and a 50.6 percent voting control of the company.
“The implementation of the investment by Star in Shoprite Holdings is subject to a number of conditions precedent, including various merger filings. Shareholders will be informed once all the conditions precedent for the implementation of the transaction have been met,” the company said.
Shoprite shares closed 2.23 percent higher at R232.92 on the JSE on Friday.
Star was founded in July, following the restructuring of Steinhoff ’s African retail assets and was listed in September in a move to allow Steinhoff to issue shares to help fund the move for Shoprite.
Star comprises retail chains including Pep, Ackermans, Timbercity, Pennypinchers, HiFi Corporation, Incredible Connection and Shoe City. Pep and Ackermans account for the bulk of the group’s revenue.
The merger is the brainchild of Christo Wiese, South Africa’s fourth-richest person, with a fortune of about $5.7 billion (R78.25bn). Wiese, who owns 16 percent of Shoprite and 23 percent of Steinhoff, plans to create the continent’s largest retailer by combining the African operations of Shoprite and Steinhoff.
The two retail giants called off merger talks in February after the major shareholders of Steinhoff, Public Investment Corporation, and Titan failed to agree on the ratio that would have been involved in the exchange of shares into Steinhoff.
Steinhoff said previously that Star would leverage off its strategic expertise, centralised sourcing, and manufacturing and logistics expertise in order to maximise operating efficiencies across its retail operations following the listing.
Shoprite said in its latest annual report that it had outperformed the retail industry in terms of growth and shareholder return. “One of our key measures of success is trading profit, which increased by 11.6 percent,” the group said.
In the year to June, Shoprite, which trades in 15 countries with 2 689 stores, boosted turnover 14.4 percent to just more than R130bn in the year to June.
Turnover surged to R141bn, with LiquorShop achieving the highest sales growth of R4.8bn.
The group compounded high levels of unemployment, consumer indebtedness, and shrinking disposable income to strengthen its stranglehold on the local retail market, opening 1 001 supermarket stores in the country and stamping its footprint in Africa.
The company managed to grow its businesses against the consumer indebtedness and the shrinking in disposable income.
“While developing countries beyond Africa are under investigation, the group will continue to enlarge its footprint on the continent through expansion in the current countries it operates in as well as new territories altogether,” the company said.
The group created more than 6 000 job opportunities during the period with the youth being the main beneficiary.