Little benefit seen in retail giant Shoprite-Steinhoff
Since the announcement of the Shoprite-Steinhoff move to launch a retail giant in December, investors and analysts have feared that the deal is being struck at the expense of minority shareholders
The shares of Steinhoff and Shoprite have fallen 5.3% and 3.3% respectively since the announcement. Karl Gevers, head of research at Benguela Global and a minority shareholder in Shoprite, said: "We don't see any benefits for Shoprite shareholders in this deal, given the lack of obvious synergies. If anything, the high-quality Shoprite business will be lumped together with lower-quality apparel, furniture and hardware retail business." Benguela, whose client funds have invested 3% in the grocery retailer, said Shoprite shareholders could support the proposed deal only if the Steinhoff Africa retail business was attractively priced or valued. "This would leave some unhappy Steinhoff shareholders, given the recent premium price Steinhoff paid for Pepkor at about 30 times the price: earnings ratio," Gevers said. According to the terms of the deal, Steinhoff would sell its African assets to Shoprite in return for a controlling stake in Shoprite, while Steinhoff would exchange Steinhoff ...
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