December — by any standard — is not a month most investors expect to be confronted by big corporate tie-ups. Or at least it wasn’t until Steinhoff and Shoprite (officially) divulged news that they were indeed hatching a mega-deal to create a unit called Retail Africa through the merger of their African operations.

No-one can say the market was not warned. Christo Wiese, owner of 23.1% of Steinhoff and 15.93% of Shoprite, had made it abundantly clear in a string of not-so-cryptic statements that it would be a "natural development" for the two retail giants to join forces.

Both groups were rather thin on the details when the news broke, leaving many asking: what’s in it for Wiese?

"I love scale," the retail tycoon told the Financial Mail. "Both companies have also been part of my life for a very long time."

Wiese’s association with Steinhoff-owned Pepkor, a key element of the Retail Africa deal, goes back to the late 1960s.

It was also Pepkor that got the Shoprite growth story rolling when in November 1970
it acquired the then eight-store food retailer 
for R1m.

In his desire to create Retail Africa, Wiese has the full support of the two groups’ second-largest shareholder, SA’s Public Investment Corp, owner of 8.5% of Steinhoff and 11.05% of Shoprite.

News of the proposed deal — which will create the R170bn annual revenue Retail Africa — has not really gone down well with the broader market. Since its announcement on December 14, Steinhoff’s share price has shed 11% and Shoprite’s 13%.

Rattling the market is the lack of clarity in what smacks of a hastily issued joint statement by Steinhoff and Shoprite in response to Wiese’s slew of public comments. It says little more than that to create Retail Africa, Shoprite will issue new ordinary shares to Steinhoff in exchange for "a significant equity interest" in Shoprite.

The big issues about which the market wants clarity are the critical details of the pricing of the exchange and Steinhoff’s ultimate equity holding in Shoprite.

Wiese is not fazed by the market’s concern about the pricing of the deal.

"All will be clear in time," he says. "We are very excited about the deal."

Ricco Friedrich of Denker Capital believes one outcome is certain: Steinhoff will gain control of Shoprite through Retail Africa.

It is not the first time that big deals executed by Shoprite and Steinhoff have met with market scepticism.

Back in 1991 when the then diminutive Shoprite bought a struggling Checkers, the market reacted by wiping 60% off Shoprite’s share price. Steinhoff’s first major international move, its acquisition of French retailer Conforama for €1.2bn in 2011, was greeted by an equally sceptical market.

The market’s assessment of the deals proved in time to be wrong. Alec Abraham of Sasfin Securities believes the market is making another error of judgement with Retail Africa.

"It is a good move," he says. "It will give Shoprite even more scale than it already has."

It might indeed.