CASHBUILD, the southern African based retailer of building materials and products directly to the public, plans to continue pursuing growth opportunities following the canning of its R1 billion acquisition of Pepkor subsidiary The Building Company (TBC).
Cashbuild said it was disheartened following the Competition Commission’s decision to block its TBC acquisition, according to the group’s annual report released on Friday.
“We are disappointed with the termination of the acquisition of TBC as we firmly believe that this transaction would have aligned with Cashbuild’s vision of being the preferred supplier of building material and associated products and services across all market segments,” chief executive Werner de Jager said.
The commission prohibited Cashbuild’s R1.075bn acquisition of TBC in May, citing that the proposed merger would create the single largest retailer of building material, hardware and related products in South Africa.
The commission was also concerned that the merging parties would use their buying power to both squeeze the margins of their suppliers, and to exclude their rivals from competing in townships or rural areas.
However, De Jager said despite this Cashbuild would continue to search for growth prospects.
“Cashbuild will, however, continue to pursue growth opportunities while still maintaining its commitment to its customers in the South African and neighbouring market,” said De Jager.
Cashbuild said it planned to open an average of 10 new stores a year which would be approved based on the identified locations showing clear potential to meet strict financial and operational criteria, according to the integrated annual report.
The group operates 319 stores including 55 P&L Hardware stores and one Cashbuild DIY store, trading across seven countries throughout southern Africa including Zambia, Botswana and eSwatini.
The group said although it had a strategy to expand into Africa, the process of opening a store cross border was onerous and time-consuming. Cashbuild currently has 33 stores outside of South Africa.
“Opportunities to expand further into the rest of Africa will continue to be carefully considered and their viability assessed, as and when they become evident,” said the group.
It said the cost of getting stock into its Zambia operations from South Africa remained excessive and negatively contributed to competitiveness in that country.
“A key focus of management is to progressively increase procurement through local suppliers with a view to improving competitiveness,” said the group.
BUSINESS REPORT ONLINE