Steinhoff, Shoprite in talks to create African retail giant

Under the proposed deal, Shoprite would issue shares to Steinhoff in exchange for its assets on the continent.

FILE: Picture: Isaacgerg/Wikicommons.

JOHANNESBURG - Africa's biggest grocery retailer Shoprite is in talks with Steinhoff about buying its African assets in an all-share deal that would create a group with $15 billion in annual sales, the pair said on Wednesday.

The deal, whose value was not disclosed, would form a no-frills retailer spanning food, furniture and clothes and underline the determination of tycoon Christo Wiese to put more of his assets under one roof.

Both Shoprite and Steinhoff, the owner of UK's Poundland and US-based Mattress Firm, count South African retail magnate Wiese as their biggest shareholder.

"This is a big move," said Ashburton Investment's fund manager, Wayne McCurrie.

"It will certainly change the retail environment in South Africa because these are two major groups getting together."

Under the proposed deal, Shoprite would issue shares to Steinhoff in exchange for its assets on the continent that include clothes discount Pepkor and furniture business JD Group.

The transaction would give Steinhoff, which vies for global market share with Sweden's Ikea, a significant equity interest in Shoprite, a R110 billion company with operations in more than a dozen African countries that include South Africa, Nigeria and Angola.

Wiese told Reuters in September that a full merger of the two companies would be a "natural development".

Shares in Shoprite were little changed at R193.75 while Steinhoff stock in Johannesburg dropped 6.6% to R71 as of 11.09 GMT.

Wiese owns 16% of Shoprite and 23% of Steinhoff, where he is also a chairman.