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Steinhoff in renewed bid for R35.5bn stake in Shoprite

Aug 07 2017 13:58
Lameez Omarjee

A shopping centre in Ga-Rankuwa Zone 6 that was looted overnight. (Jeff Wicks, News24)

Company Data

SHOPRITE HOLDINGS LIMITED [JSE:SHP]

Last traded 134
Change 1
% Change 1
Cumulative volume 1323589
Market cap 0

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

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Johannesburg – Steinhoff’s [JSE: SHF] merger plans with Shoprite [JSE: SHP] may have fallen through, but the international retail holding company still plans to acquire a stake in the retailer through its African business unit.

Steinhoff International announced to shareholders that the listing of its African retail business on the JSE should be completed by the end of September. The listing of the holding company, Steinhoff African Retail Limited (STAR) which was established on July 1, will also be accompanied by a capital raise through a private placement. The proceeds are to be distributed to Steinhoff.

STAR is expected to be part of the JSE Top 40 and the MSCI Emerging Market Index. STAR owns all of the African retail assets. These include Pep, Ackermans, the JD Group which includes Russells, Bradlows, Rochester, Incredible Connection and Hi-Fi Corporation and Tekkie Town, among others.

The board decided to exclude Unitrans Automotive business from the listing due to its different characteristics and growth drivers compared to the other African assets. The company is still owned by Steinhoff.

READ: Shoprite, Steinhoff shares surge as merger talks collapse

STAR is expected to compete with domestic and international retailers in Africa and as a subsidiary of Steinhoff will benefit from the group’s sourcing, scale, shared best practices and strategic direction. Each of the businesses will continued to be managed on a decentralised basis.

Steinhoff’s chief financial officer, Ben la Grange, will be appointed chief executive of STAR, while retaining his current position at Steinhoff.

Shoprite stake

Due to STAR’s focus on the African consumer base, Steinhoff and STAR have secured call options which could see STAR acquire a stake in Shoprite. This is a 22.7% economic interest and 50% voting rights.

The call options will only be exercised following the listing. Whether the call options are implemented or not, Shoprite will still be listed separately on the JSE, Steinhoff clarified.

The consideration payable is over R35.5bn. This is R215 for each of the 128.2 million shares, with an additional R4bn attributable to deferred voting shares and R4bn for cash and cash equivalents held by Thibault, one of the parties to the call option agreement. Other parties include Lancaster and Titan Premier Investments Pty Ltd, controlled by the family trust of Steinhoff chairperson Christo Wiese.

This call option is subject to approval by competition authorities.

Shoprite CEO Pieter Engelbrecht said that Shoprite’s management and operations would continue independently and that the company has been accustomed to a “supportive controlling shareholder structure”.

“The proposed investment in Shoprite will strengthen STAR’s ability to offer a unique value proposition to all of its stakeholders...Both Shoprite and STAR will have a credible shareholder of reference that will support the STAR group’s growth ambitions,” added La Grange.  

He said there is potential for the companies to work together to expand to new regions.

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