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Shoprite deal unravels as Wiese scurries to save Steinhoff

Dec 15 2017 21:46
Loni Prinsloo, Bloomberg

Cape Town - The spectacular collapse in the share price of Steinhoff International Holdings is hindering Christo Wiese’s plans to pool his African retail assets.

The SA billionaire has had to pull out of a deal that will give Steinhoff Africa Retail a 23.1% stake and a 50.6% voting interest in Shoprite Holdings, the continent’s largest grocery chain.

Steinhoff Africa Retail, or STAR, is now in talks with the manager of pensions for South African civil servants and the company’s black investors about exercising the option to take the stake, it said in a statement on Friday.

READ: Steinhoff sells 20.6 million PSG shares for R4.7bn

Shares in Cape Town-based Shoprite, which Wiese controls through voting rights that accrue to various entities tied to him, fell 5.7% to close at R210.69.

STAR rose 10% to end the day at R18.50 a share.

“The market is worried that Christo Wiese will now have to sell his shares in Shoprite for liquidity,” said Wayne McCurrie, a money manager at Ashburton Investments Management in Johannesburg. “The deal that was made two weeks ago has fallen through.”

Shares in Steinhoff International have plunged more than 80% since its Chief Executive Officer Markus Jooste resigned and the Frankfurt-listed company appointed PwC to probe potential accounting irregularities.

Wiese, 76, stepped down from his role as chairman of the owner of Mattress Firm in the US and Conforama in France on Thursday to resolve questions over any conflict of interest as the company fights for survival. 

Wiese’s net worth has slumped by $4 billion to $2 billion this year, according to the Bloomberg Billionaire’s Index.

PIC in the picture 

STAR’s board will enter into discussions with Public Investment Corporation, which manages pensions on behalf of South African government employees as the largest money manager in Africa, and Lancaster, a group of black investors who own about 8.8 percent of the retailer, STAR said.

READ: Govt and business working together to protect pensions, financial markets in Steinhoff matter 

“It essentially means that that the deal they wanted to make falls apart where STAR would have taken control of Shoprite,” said Byron Lotter, an equities analyst at Vestact in Johannesburg.

“Christo Wiese, PIC and others were going to sell all their Shoprite shares to STAR and give STAR control over Shoprite. That is not happening anymore, and it’s best for Wiese to hold Shoprite.”

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