Johannesburg - Steinhoff International Holdings NV plans to list its
African assets separately as the acquisitive retailer seeks a new prize for
shareholders following this year’s failed merger talks with Shoprite Holdings
Ltd.
The company said Wednesday it will seek to list businesses
including clothing retailer Pepkor and furniture chain JD Group Ltd. on
the Johannesburg Stock Exchange, about 18 months after moving its primary
listing to Frankfurt from the South African commercial hub.
The new business could be worth as much as 60 billion rand
($4.5 billion), said Evan Walker, a money manager at 36one Asset
Management in Johannesburg, although the valuation could also be as low as 40
billion rand depending on how much debt Steinhoff puts into the vehicle.
The move reflects the parent company’s transformation into a
global retail giant with about two-thirds of its revenue generated outside
Africa a proportion that’s growing after Steinhoff last year spent more than $3
billion on takeovers in the UK, US and Australia. The listing is aimed at
creating value for Steinhoff investors, including billionaire Christo Wiese,
after a roughly 10 percent drop in the shares since discussions with Shoprite
ended in February.
The listing will give the African unit a “stand-alone track
record” that may “open fresh options with Shoprite further down the line,” said
Sasha Naryshkine, an analyst at Vestact Ltd., a Johannesburg-based money
manager, which has a buy recommendation on the stock. Steinhoff may use the
money raised to reduce rand-denominated debt and to expand its distribution in
Africa, he said. It may also help South Africa’s Public Investment Corp. take a
bigger stake in the newly listed company, he said.
Natural Progression
The planned separation is “a natural progression” for
Steinhoff following its expansion, the company said in a statement. Wiese,
75, became Steinhoff’s biggest shareholder when he sold clothing chain Pepkor
to the company for 62.8 billion rand in 2014. He is also the largest
investor in Cape Town-based Shoprite, and was at the heart of the combination
talks between the two companies.
In addition to Pepkor and JD, Steinhoff’s African assets
include sports-shoe specialist Tekkie Town and Poco furniture stores. Combined
sales for the company’s businesses on the continent were 4.3 billion Euros in
the 12 months through September.
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The shares fell 0.9 percent to 4.51 Euros at 10:22 a.m. in
Frankfurt, extending Wednesday’s 2.8 percent drop. They’ve declined 8 percent
this year.
Outside Africa, the company’s recent acquisitions have
included UK discount chain Poundland Group Plc, Mattress Firm Holding Corp. of
the US and Australia’s Fantastic Holdings Ltd.
Steinhoff said it will retain a controlling interest in the
new company. The move will include a capital raising to achieve the appropriate
level of public ownership, it said. Steinhoff appointed Citigroup Inc., Investec Plc, Morgan
Stanley and FirstRand Ltd.’s Rand Merchant Bank to advise on the proposed
listing, which is subject to market conditions and regulatory approvals.
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