Shoprite, Steinhoff shares surge as merger talks collapse

Cape Town - Shoprite and Steinhoff announced on Monday that they will no longer pursue their proposed merger, as the parties involved could not reach agreement on the share exchange ratio.

Investors cheered the move, sending the share prices of Shoprite and Steinhoff up 6.1% to R183.57 and 7.11% to R71.55 respectively at 11:01 on the JSE.

The proposal was for Shoprite to buy Steinhoff’s African retail assets in exchange for an undisclosed yet significant equity stake.

This could have led to Steinhoff taking control of Shoprite via a buyout offer to minority shareholders.

The companies said in a joint statement that Steinhoff and its largest shareholders - the Public Investment Corporation and Titan Premier Investments - could not reach agreement on the exchange ratio that would apply to the share exchange.

Bringing Shoprite and Steinhoff together would have given the combined entity the scale to sell everything from potatoes to sofas and sneakers at discount prices to consumers on the continent, Bloomberg reported.

READ: Billionaire Wiese’s long walk to Shoprite/Steinhoff merger

According to the report, Steinhoff has more than 11 000 retail outlets in 32 countries. In Africa its Pep clothing retailer accounts for about 2 000 shops. Shoprite had 2 711 supermarkets across Africa as of June. Separating Steinhoff’s African assets from operations elsewhere in the world, such as Conforama of France and Mattress Firm in the US, would have helped both parts of the business to pursue their own growth opportunities.

Shoprite and Steinhoff said on Monday the proposed transaction was investigated and analysed by their respective management teams. Although it presents exciting opportunities, the fact that the relevant parties could not reach an agreement in respect of the share exchange resulted in negotiations being terminated.