Johannesburg - Lewis Group agreed to buy the Beares brand and some stores from Ellerine Holdings, the furniture retailer of failed lender African Bank Investments Ltd.
Negotiations followed a “competitive bid process” after which administrators of Ellerine accepted an offer from Lewis, the Cape Town-based retailer said in a statement today, without disclosing the value of the deal.
A binding sale agreement is subject to various conditions, including the approval of South African competition authorities.
Ellerine went into bankruptcy in August after almost 60 years in business when Abil, as the Johannesburg-based lender is known, withdrew funding following losses of at least 70 million rand month since 2013.
Administrators have since been trying to save the operations, which provided jobs for 8,000 people across 940 stores.
“We plan to integrate the business into Lewis Group’s store, merchandise, supply chain and credit operations,” Lewis chief executive Johan Enslin said in the statement.
Beares aligns with the company’s strategy of gaining access to higher-earning customers, he said.
Lewis climbed as much as 4 percent, and was trading up 2.7 percent at 65.50 rand as of 9:47 am in Johannesburg.
The stock has dropped 7.6 percent this year as costs for bad debt increased and sales declined.
Rival JD Group Ltd. has lost 14 percent this year after halting dividends as more customers failed to meet payment deadlines.
The Competition Commission said yesterday it approved the purchase by Coricraft Group of Dial-a-Bed, a unit of Ellerine, saying it saves a “substantial” number of jobs.
Lewis will provide an update on its talks on November 10 when it reports interim earnings. - Bloomberg News