Steinhoff moves into clothes with R62.8bn Pepkor buy | Fin24
  • Ferial Haffajee

    Why Minister of Public Enterprises Pravin Gordhan’s patriotism call to fly SAA flopped.

  • Solly Moeng

    State capture is meant to be over, but we aren't free if its beneficiaries go unpunished.

  • South African Airways

    A business rescue practitioner has been appointed to try and save the struggling flag carrier.


Steinhoff moves into clothes with R62.8bn Pepkor buy

Nov 25 2014 11:23

Company Data

Steinhoff International Holdings NV [JSE:SNH]

Last traded 1
Change 0
% Change -2
Cumulative volume 8913773
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Brait SE [JSE:BAT]

Last traded 15
Change 0
% Change -2
Cumulative volume 168582
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Johannesburg - Furniture firm Steinhoff International [JSE:SHF] will buy 92% of clothing retailer Pepkor, it said on Tuesday, in a R62.8bn deal that gives it exposure to the fast-growing African apparel market.

Steinhoff, a furniture retailer targeting budget-conscious shoppers in southern Africa and Europe, said it will pay R62.8bn ($5.7bn) for the stake in Pepkor, which owns the Pep brand that sells everything from school uniforms to household goods to mobile phones.

The deal will see Steinhoff buy Pepkor from private equity firm Brait [JSE:BAT] and entities controlled by Christo Wiese, one of South Africa's best known businessmen and the top investor in African retail giant Shoprite.

While 68% of Pepkor's revenue comes from Africa, the company is also a major retailer in Poland and has been growing in eastern Europe, so the deal will allow Steinhoff to accelerate its own European expansion.

"Strategically it does make sense," said Nic Norman-Smith, Chief Investment Officer of Lentus Asset Management, which owns shares in Steinhoff.

"It certainly will provide scale benefits and scale is one of the few areas where you can generate a competitive advantage in retail."

However, at a price of nearly twice Pepkor's annual sales, the deal was also "quite expensive", Norman-Smith said.

Steinhoff said it will buy Wiese's 52.47% stake for 609.1 million shares at a price of R57 each and Brait's 37.06% for R15bn in cash and 200 million shares. It will also buy 2.81% from Pepkor's management giving it a 92.34% stake overall.

Steinhoff said it will fund the cash portion through existing cash resources.

The deal will give entities controlled by Wiese, who is a director of Steinhoff, about 20% of the furniture company and will therefore require endorsement by an outside expert as to its "fairness", Steinhoff said.

Half of its shareholders have already approved the deal.

Shares of Steinhoff were up 1.6% at R56.85 at 10:55, while Brait's shares plunged nearly 20%.



Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What do you think about private healthcare in SA?

Previous results · Suggest a vote