Lewis family makes inroads into German publishing

By Time of article published Mar 8, 2006

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Michael Lewis, whose family built Foschini, one of South Africa's top clothing retail groups, has bought a 3 percent share in Germany's largest newspaper group, Alex Springer, for E104 million (R775 million), and he could "potentially" become a board member, according to Handelsblatt and other German financial newspapers.

Alex Springer owns more than 150 newspapers and magazines in 27 countries, including Germany, Hungary, Poland, the Czech Republic, Russia, France, Spain and Switzerland. The group is actively looking for opportunities in China, where it opened a representative office in 2004.

The investment in Alex Springer comes soon after Lewis family trusts sold a 2.1 percent stake in Foschini for R273 million in January. The family said the sale was aimed at balancing its investment portfolio and it would retain its remaining 6.8 percent share of the company, in which it saw itself as a long-term investor.

On whether Michael Lewis would join the supervisory board of Alex Springer, the Lewis family said that no decision had been taken but that it was "under active consideration".

The family, speaking through its investment holding company, Oceana Retail, also said it would buy more Alex Springer shares if they became available and the media group's management was in favour of the purchase.

Some German newspapers speculated that Michael Lewis, who, they said, shunned the limelight, would not take a seat on the supervisory board, but they argued that he could extend his holding in the publishing group.

The Lewis family said that it "shared values" with Alex Springer, whose assets it described as "amazing". It also noted that the company had a strong footprint in the emerging markets of eastern Europe.

Michael Lewis, who moved from South Africa to London 23 years ago, bought the 3 percent stake from Friede Springer, the majority shareholder and widow of company founder Alex CŠsar.

German reports said that Friede Springer and Mathias Döpfner, the head of the Alex Springer management board, were close friends of Lewis.

Springer now controls 57 percent of the publishing group. She last bought shares in the company over three years ago and reportedly almost doubled her money on the sale to Lewis, realising a profit of about E50 million. This was seen as significant as it was believed that she had borrowed money to increase her stake.

The German newspaper reports made much of the fact that Lewis was a financial backer of the Conservative Party in the UK.

The Lewis family's connection with retail in South Africa, and with Cape Town in particular, spans three generations. Furniture retailer the Lewis Group was named after Michael Lewis' grandfather, Meyer Lewis.

Lewis family investments today extend beyond retail to diverse sectors such as property, infrastructure and biotechnology. - Tom Robbins

Woolworths Holdings - This retail group's chain of convenience food stores must be the envy of the country's other major supermarket groups.

Demand for products from these compact-format stores from time-stressed professionals and well-to-do parents is strong, to put it mildly.

The demand from more modest earners is also on the rise, mostly for meat products such as roasted chickens.

As new residential areas have been developed on the outskirts of the main cities, retail spaces accessible to harried commuters have followed hot on their heels. Developers of these community shopping centres and the like have often been keen to sign up Woolworths as a tenant, because this almost guarantees dense foot traffic.

Moreover, the foot traffic attracted by Woolworths food stores lures other retailers in to sign leases with landlords in locations they might otherwise have shunned. To save their sagging fortunes some supermarket groups have in fact asked Woolworths to move into a mall where they are anchor tenants.

But demand has also created a good-times problem for the company in some older suburbs, such as Parkview in Johannesburg. It is harder to get sites in some of these more established areas, where minimalls aren't springing up overnight. Town planning permission for development is also harder to come by and municipal town planning departments are stretched.

Woolworths won't put up a store on just any site either; the position has to offer real convenience. On top of that, negotiations with owners of some of these older stand-alone sites might not be as easy as in a minimall, where there is a give (relatively low rentals for Woolworths) and a big take (relatively high rentals for all the other tenants).

The possibility that Woolworths, which prefers to rent properties, might buy some sites to accelerate this process is news indeed. A stable landlord might even regenerate some of these strips, even if it adds to traffic congestion, which in turn could create a new need for convenience. - Tom Robbins

Absa Group - It was only a matter of time before executives at the country's biggest bank by assets began dusting up their CVs and sought greener pastures elsewhere.

Since Barclays took a controlling stake in Absa last year, four middle and senior executives have resigned. The list grew yesterday with the announcement that the chief executive of Abvest Associates, Sam Houlie, had resigned after Absa had asked the company to consider moving its headquarters from Cape Town to Johannesburg.

Absa owns 90 percent of Abvest Holdings, which holds 70 percent of the investment management company.

Houlie's resignation comes after executive director Israel Skosana quit Absa last month to pursue his own interests. Skosana followed Jenny Tyobeka (managing executive for flexi-banking services), Brendan O'Donnell (group executive for group marketing and communication), and Juliette du Preez (managing executive for delivery channel services), who all left Absa to pursue their own interests.

Houlie's job will go to Alan Miller, the investment head at Absa Financial Services, who said last month that a relocation could help Abvest, which was established by Absa to provide independent investment services, achieve greater synergies with the rest of the Absa family. - Jabulani Sikhakhane

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