Shoprite shares fall after Steinhoff says could buy controlling stake

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Shoprite shares fall after Steinhoff says could buy controlling stake

8:55 CAT | 07 Aug 2017

A shopper is seen outside a Shoprite store in Johannesburg July 7, 2015. REUTERS/Siphiwe Sibeko/File Photo - RTX2MO0A

Reuters (File photo) / A shopper is seen outside a Shoprite store in Johannesburg July 7, 2015.

Shares in South Africa’s Shoprite fell more than 5 percent on Monday as investors digested news that Steinhoff through its African spinoff could acquire a controlling stake in the supermarket operator in a share deal worth 35.5 billion rand ($2.6 billion).

Steinhoff said on Friday it has established a single holding company, Steinhoff Africa Retail (STAR), and would list it on the Johannesburg Stock Exchange.

Also Read: Steinhoff ‘terminates negotiations’ with Shoprite over merger

Also Read: I’m not fleeing SA, says Whitey about selling off R1.8bn in Shoprite shares

It also said it has entered into call option agreements with Titan Premier Investments, a company ultimately controlled by a Wiese family trust, as well as the Public Investment Corporation (PIC) and Lancaster Group under the terms of which STAR could acquire economic and voting interests in Shoprite.

Also Read; Steinhoff, Shoprite in talks to create African retail giant

At market open, shares in Shoprite fell 5.60 percent before paring losses to 4.13 percent at 200.39 rand by 1152 GMT.

A trader at GT247, Paul Chakaduka, said investors were positioning themselves for STAR in anticipation that it will have a much bigger market capitalisation than Shoprite.

Also Read: Shoprite supermarket opens in Zimpeto

“A lot of the smart money is selling out of Shoprite in anticipation of this move,” Chakaduka said.

“It’s pretty clear to the market that the PIC would rather reduce their holding or participation in Shoprite and would rather put more emphasis on the new listing.”

Also Read: Retiring Shoprite CEO Whitey Basson: ‘I am tired’

Once the call options are exercised and implemented, STAR will hold approximately 22.7 percent of the economic interest and 50 percent of the voting rights in Shoprite, Steinhoff said.

The PIC, is the second largest shareholder in Shoprite, with a holding of 10.55 percent, Reuters data showed.

Also Read: More on inauguration of Shoprite’s US$20m shopping mall in Pemba

Steinhoff abandoned plans to merge with Shoprite in February, but billionaire Christo Wiese, who is the largest shareholder in both companies and their chairman, has said he wants to consolidate his holdings.

($1 = 13.3756 rand)

Source: Reuters