Shoprite Says Steinhoff Stake Build Won't Hurt Independence
Shoprite Holdings Ltd. won’t let the purchase of a 22.7% stake in the food retailer by Steinhoff International Holdings NV affect its independence and is on the hunt for acquisitions of its own, according to Chief Executive Officer Pieter Engelbrecht.
Africa’s largest supermarket chain will continue to dictate its own strategy, the CEO said in an interview after an earnings presentation in Cape Town on Tuesday. The partnership could even support Shoprite’s expansion due to potential savings in countries where Steinhoff already operates, Engelbrecht said. For example, the CEO traveled to Poland in the last week and sees potential expansion there as an “easy foray”.
“Poland would be an example of a synergy from the Steinhoff deal that we could exploit,” he said.
Engelbrecht’s position was supported by his chairman, South African billionaire Christo Wiese, who said at the same Cape Town event that as he is the largest shareholder in both companies, the stake purchase doesn’t affect ultimate ownership. Steinhoff CEO Markus Jooste also attended the earnings presentation.
Engelbrecht was making his first public comments since Steinhoff, an acquisitive global clothes and furniture retailer, said its African retail division will buy the stake as part of a planned spinoff and listing in Johannesburg. The move enables Wiese, South Africa’s fourth-richest person with a net worth of about $5.6 billion, to combine his retail assets after a proposed merger of Shoprite and Steinhoff fell through earlier this year.
Steinhoff will buy the Shoprite stake for about 35.5 billion rand ($2.6 billion), which includes 4 billion rand to hold voting rights of 50%. The company agreed to pay 215 rand each for 128.2 million shares and another 4 billion to a company controlled by Wiese. Shoprite shares declined 1.7% to 213.37 rand as of 12:19 pm in Johannesburg on Wednesday.
Whitey Basson, who stepped down as Shoprite’s CEO at the end of last year after almost four decades at the helm, said he has every confidence in the Shoprite management team and that Engelbrecht “has his own mind” in terms of any influence from Steinhoff. Basson, who is deciding to what extent he will be involved with the company in retirement, is still an investor in Shoprite. He sold 1.8 billion rand worth of Shoprite shares to the company in May through a put option, which is to be voted on by shareholders on 5 September.
“I focused on organic growth because I needed the returns,” Basson said after Tuesday’s presentation. “But acquisitions are another way of doing business.”
For his part, Engelbrecht said “there are a few possibilities we are busy exploring” in Africa. Some of the potential purchases are in countries in which Shoprite doesn’t already operate, while the company will also consider acquisitions outside the continent, he said.