Foschini shares fall by 1.17% in spite of Jet Stores deal taking off
JOHANNESBURG - The Foschini Group (TFG) fell 1.17percent on the JSE on Wednesday to close at R76.30 despite the listed homeware and fashion retailer getting the green light to purchase Edcon’s discount department store division, Jet Stores.
The Competition Tribunal on Wednesday approved TFG’s R480million acquisition of 371 Jet stores, with conditions relating to employment and local procurement.
The tribunal ruled the transaction was unlikely to result in a substantial prevention or lessening of competition in any relevant markets.
It stipulated TFG should not retrench any employees for two years from the merger’s implementation date, saving thousands of jobs.
The tribunal ordered employees must be transferred to TFG in accordance with the provisions of section 197 of the Labour Relations Act.
It also ordered TFG to give preference to eligible Edcon employees should vacancies arise in the Jet business for three years from the merger implementation date.
It added the merged entity should ensure Jet Stores maintain at least the same ratio of procurement of apparel products from South African manufacturers and suppliers as it did at the end of its preceding financial year.
“In addition, the merged entity must endeavour to increase the target firm's ratio of procurement of apparel products from South African manufacturers and suppliers as at the end of its preceding financial year,” the tribunal said.
The go-ahead comes after the Competition Commission recommended the approval of the transaction with conditions that included retaining more than 4000 Jet employees.
The tribunal ordered the merging parties to ensure the transferred stores were fully integrated into TFG’s structures and operated in accordance with its business plans, subject to external and internal circumstances.
In June, Edcon served about 22000 employees with section 189 notices, which were an invitation for consultation on the restructuring of the company.
Last week, the SA Commercial and Catering Workers' Union said about 4200 Jet employees had accepted voluntary severance packages following an agreement with Edcon management, but without the involvement of the union.
Edcon, the 90-year-old retailer, has been disposing of its assets and filed for business rescue in April after losing R2bn in sales, coupled with debt collection problems.
Edcon’s business rescue practitioners said the economy needed the continuity of business in these unusual times of headwinds and change.
“We are pleased that these deals will allow for that continuity and contribution to the economy, positively impacting the entire retail value chain, including suppliers and landlords,” they said.