Shoprite, Africa’s largest retailer, looks set to be acquired by Steinhoff, the furniture group that wants to be the continent’s IKEA. On Dec. 14, the two companies’ largest shareholders issued a cautionary notice, announcing the creation of an entity called Retail Africa.

The Public Investment Corporation, the investment firm owned by the South African government, and Titan Premier Investments, owned by South Africa’s richest man, Christo Wiese, said they have “initiated and facilitated” discussions between the two companies’ boards. (The PIC and Wiese are Shoprite’s largest shareholders, while Wiese owns a further 18% in Steinhoff.) They envisage the new entity as a diversified retailer with international reach that could be “a retail champion of Africa.”

Shoprite will take over Steinhoff’s African retail operations, which include clothing, furniture, and DIY outlets that have a footprint across the continent. The deal will see Shoprite issue new ordinary shares to Steinhoff, which would give Steinhoff significant equity in Shoprite Holdings, the notice said. Steinhoff Group would acquire the PIC and Titan’s interests in Shoprite at a later stage. No concrete dates have been given for the merger.

The merger will give Steinhoff access to the African market through Shoprite, the statement said. Steinhoff was started in Germany in the 1960s and moved its headquarters to South Africa in 1998 when it acquired the local Gommagomma furnishings chain. Now the Cape Town-based company, listed in Frankfurt and Johannesburg, wants to position itself as the IKEA of Africa and beyond. In August of this year, the furniture retail chain entered the US market when it acquired Mattress Firm Holdings Corp, and earlier this year, it acquired the discount British retailer Poundland.

Shoprite is Africa’s largest grocery chain, founded in South Africa in 1979 with more than 2,200 stores in over 16 countries today. In October, the chain’s CEO, Whitey Basson, stepped down after nearly four decades at the company. Many speculated that Basson was stepping aside to allow this merger.

Vestact, an investment and analytics firm, estimated that Retail Africa would have annual revenues of 200 billion Rand, more than 14 billion dollars. “That,” the firm declared in a commentary on the news, “is an epic beast.”

Alade Counselor
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