Steinhoff considers move to Germany

File photo: Damien Meyer

File photo: Damien Meyer

Published Apr 15, 2014

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Steinhoff International is exploring moving its home base from South Africa to Germany to be closer to its biggest markets, according to people familiar with the matter.

The home furnishings seller was considering listing in Frankfurt and potentially moving its legal domicile to Germany as part of that process, said the people, who declined to be identified. That plan would replace the alternative of listing only its European business, which is also being considered. It could include either retaining a Johannesburg listing or leaving that exchange, they said.

Barclays, BNP Paribas, Citigroup and Commerzbank were working with Steinhoff on the plans, the people said. By relocating, it would benefit from being able to use European shares to pay for acquisitions as well as more liquid trading, one of the people said.

Other South African companies with substantial international operations have made similar moves to be closer to bigger overseas markets. Brewer SABMiller moved its primary listing to London in 1999, where it is based – a similar trajectory to that of mining group Anglo American. Both kept their JSE listings.

Mariza Nel, a director at Steinhoff, declined to comment. Representatives for Barclays, BNP Paribas, Citigroup and Commerzbank could not be reached for comment.

Steinhoff has had its hands full with the taking over of subsidiary JD Group in South Africa. Last month, it announced its decision to take over the ailing furniture retailer. It said it planned to acquire 98 percent of JD Group’s issued ordinary shares.

Steinhoff said its decision to take over the retailer, which owns Russells, Morkels and Joshua Doore chains, was because JD Group faced challenges in its furniture retail and finance businesses.

JD Group indicated that it would increase its impairment provision by R602 million to R1.6 billion for the six months to December. In addition, R495m of bad debt had been written off – up from R184m in December 2012. It also discontinued its personal loans division.

Another Steinhoff subsidiary in South Africa, KAP Industrial, which has logistics and manufacturing operations, delivered a good performance. KAP increased its revenue for the six months to December by 9 percent to R7.8bn with profit from continuing operation increasing 9.2 percent to R710m. It said its outlook for the next six months remained positive as South Africa’s manufacturing sector got back on its feet.

About half of Steinhoff’s revenue is from continental Europe. It spent e1.21 billion (R17bn) to buy French retailer Conforama in 2011. It bought Austrian furniture retailer kika-Leiner last year. Its stock fell 35c to R51.60 yesterday.

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