- Transaction includes Shoprite Furniture’s 400 stores in Botswana, SA and four other countries
- OK Furniture, House and Home, and Shoprite Furniture credit loan book to fall under new ownership
BONGANI MALUNGA
South African investment and holding company Pepkor has announced an agreement in principle to acquire Shoprite’s furniture business which operates more than 400 stores in Botswana, South Africa, Lesotho, Namibia, Eswatini and Zambia.
The company made the announcement of a deal worth R3.2 billion in a public statement released earlier this month.
Formerly known as the JD Group, the investment company recently rebranded to Pepkor Lifestyle, which has over 900 retail stores in Botswana, South Africa, Namibia and Eswatini.
Pepkor Lifestyle
With interests in the consumer retail and fintech markets, Pepkor is set to expand its portfolio into the furniture business through the transaction.
“Pepkor Lifestyle will expand its customer base and retail footprint while integrating Shoprite Furniture operations into its existing logistics network,” it said.
“Pepkor’s management team has the expertise and capacity to successfully incorporate the Shoprite Furniture business into the group.
Furniture, appliances and electronics
“As set out in the Shoprite Annual Results, Pepkor has entered into an agreement to acquire Shoprite’s furniture business operating in SA, Botswana, Lesotho, Namibia, Eswatini and Zambia.
“The purchase consideration represents 4 percent of Pepkor’s market capitalisation and will be settled in cash.”
The deal also includes Pepkor incorporating complementary product mixes in furniture, bedding, appliances and electronics.
Through the transaction, Pepkor will take control of the Shoprite Furniture credit loan book and insurance cell arrangements. The deal will see retail brands OK Furniture and House and Home fall under new ownership.
Regulatory check
The acquisition will still undergo regulatory processes in order to be formalised. Pepkor explained that the main reason for the new deal is to interlink its various revenue generating streams.
Shoprite’s Chief Executive Officer, Pieter Engelbrecht, explained that the Shoprite Group took a decision to fully centralise its business on its core grocery operations venture.
The furniture business contributed a turnover of R7.2 billion last year. This represented a 3 percent contribution to the company’s total full year sales report of R240.7 billion.
Hamstrung
“We found ourselves at a crossroads with the business’ future growth and profitability hamstrung by the requirement of a level of investment that would have resulted in us re-directing capital and project management resources away from that currently dedicated to our food retail operations,” the Shoprite CEO said in a supplementary statement.
With no rebranding mooted in the announcement, the acquired stores are set to retain their brand identities in the new deal. However, the potential for expansion into more areas in the southern African region has been mooted.