Retail giants Shoprite and Steinhoff plan to merge to form what will indisputably be one of Africa’s largest retail businesses.
In a statement issued on Wednesday, Shoprite says that the vision for the project is shared by both the Public Investment Corporation and Titan Premier Investments, the major shareholders of either company.
The combined entity will, as it stands, be known as “Retail Africa”, and will see Shoprite acquire all of Steinhoff’s local retail chains, including Pep, Incredible Connection, Pennypinchers and Russells, among others.
“Shoprite will issue new ordinary shares to Steinhoff in consideration, pursuant to which Steinhoff will receive a significant equity interest in Shoprite,” says the statement. “The value for Steinhoff Africa Retail will be negotiated taking into account the best interests of both Steinhoff and Shoprite shareholders.”
Shoprite believes that the proposed transaction will poise Retail Africa as one of the continent’s leading retailers, perfectly capable of competing with large international companies.
Furthermore, it notes, 186 000 people will be employed by the giant, with no job losses anticipated during the merger. “It is expected that the Proposed Transaction will further enhance Retail Africa’s position as an employer of choice,” it claims.
On top of the merger, Steinhoff intends to create a share-for-share exchange with Shoprite, subject to a set exchange ratio. The conglomerate will trade as a free entity on the JSE.