Spar to buy Irish companyComment on this story
Johannesburg - Spar agreed to buy the company that owns the brand in Ireland and southwest England as the South African food and liquor retailer seeks to boost growth outside its home market.
Spar will buy 80 percent of closely held BWG Group for 800 million rand, the Durban-based company said today in a statement.
The deal will be financed by a rand-denominated loan and includes the right to buy the remainder of Dublin-based BWG in three to five years.
“The expansion of our business internationally is an important strategic move for Spar and provides an attractive entry point into food retail and wholesale industry in Ireland,” chief executive Graham O’Connor said in an e-mailed statement.
“Several sectors of the economy are already showing strong signs of recovery and consumer spending is improving.”
BWG Group is a food retail and wholesale distribution company that services more than 1,100 stores and has about 700 Spar outlets.
It has a 35 percent share of the Irish convenience store market, according to the statement.
The Spar brand was founded in The Netherlands in 1932 and had more than 12,000 retail stores in 35 countries through various partnerships by the end of 2013, according to its website.
“The BWG Group has identified further growth opportunities in its current markets to leverage the economic recovery and has a five year capital investment program to expand its wholesale and retail operations,” O’Connor said.
The BWG purchase will also allow Spar to diversify its revenue streams and foreign currency, the company said.
The rand is the worst performer over the past year against the dollar among 16 major currencies tracked by Bloomberg, It weakened 0.4 percent to 10.7023 by 11:10 a.m. in Johannesburg.
Spar net income rose 9.4 percent to 642.9 million rand in the fiscal first half, the company said May 21.
O’Connor said the company has been enticing shoppers with regular discounts as consumers battle higher unemployment, increasing household debt and rising interest rates.
Spar shares climbed as much as 3.4 percent and traded 1.9 percent higher at 129.53 rand in Johannesburg.
The shares gained the most in four months on August 1 after the company said that it was in talks that may affect the share price.
The stock is down 1.5 percent this year, compared with a 0.2 percent fall on the FTSE/JSE Africa Food & Drug Retailers Index. - Bloomberg News