Johannesburg - Absa Group [JSE:ASA], the South African unit
of Britain’s Barclays, will pay R10bn to buy the private label store card portfolio
in South Africa of clothing and footwear retailer Edcon, the companies said on
Wednesday.
The deal is expected to close in the second half of
2012.
“(The deal will) strengthen Absa Bank’s position in the
unsecured retail credit sector, build a strategic relationship with one of
South Africa’s leading retailers and allow Absa to make a greater range of
financial services products available to existing and new customers,” the
company said in a statement.
Edcon said the deal would boost credit sales, improve its
balance sheet and allow the retailer to focus on and fund growth in its core
business activities.
The Edcon store card business operates primarily in South
Africa, with smaller operations in Botswana, Namibia, Lesotho and Swaziland.
While Absa plans to also buy Edcon’s portfolios in the
neighbouring countries, it is not a condition to the South African deal.
Under the deal, Absa will provide retail credit to Edcon
customers, while Edcon will be responsible for all customer-facing activities.
Absa shares were up 0.73% at R152 by 07:25 GMT,
outperforming a 0.08% rise in the JSE Top 40 - (Tradeable) [JSE:J200] index of
blue chip companies.