Steinhoff could get stake in Shoprite in new setup

Steinhoff's African assets will list separately on the JSE by the end of next month in a deal that may also result in Steinhoff acquiring a 22.7% stake in Shoprite. The formation of Steinhoff Africa Retail, or Star - the new name for the group's African assets - comes just seven months after a breakdown in merger talks between Shoprite and Steinhoff.

Star will include Pep, Ackermans, furniture retailer JD Group and its building-products businesses, but exclude Unitrans Automotive business from the listing "due to its different characteristic and growth drivers", the group said on Friday.

Once the African assets currently owned by Steinhoff International, which is dual listed on the JSE and in Frankfurt, are hived off into Star, it will remain a subsidiary of Steinhoff International, the company says.

The listing will be accompanied by capital-raising in order to establish the public shareholding spread and liquidity required by the JSE.

Given the size of Star's assets, it is likely to be in the JSE's Top 40 and other relevant emerging-market indices, such as the MSCI Emerging Market Index.

Steinhoff and Star have entered into call-option agreements with the Public Investment Corporation, Christo Wiese's family trust Titan Premier Investments, Steinhoff's BEE partner Lancaster Group, and one of its subsidiaries.

In terms of this, Star could acquire economic and voting interests in Thibault Square Financial Services and Shoprite. After the call option is implemented, Star will hold a 22.7% economic interest and half of the voting rights in Shoprite Holdings.

On whether Shoprite and Steinhoff may look at combining their assets in the future, Charles Allen, a senior retail analyst at London-based Bloomberg Intelligence, said "it's quite complicated and all the details have not been released".

He added that it was difficult to get a clear idea about the underlying growth of the brands to be included in Star.

Steinhoff said: "Although Star will remain a subsidiary of Steinhoff, they will continue to benefit from the group sourcing, scale advantages, shared best practices and strategic direction, allowing Star to effectively compete with both domestic and international retailers in Africa." 

The share price gained 1.61% to R68.83 on the JSE on Friday.