COMPANY COMMENT: Steinhoff paying the price for Shoprite exit
Further retraction of Steinhoff’s share price will surely raise questions about Wiese’s business prowess
To what degree will Steinhoff’s share price continue its correction vector? That is the question being asked as the global furniture group’s share price keeps sliding following its decision to walk away from retail magnate Christo Wiese’s integration plans with Shoprite to create an African retail giant. Steinhoff’s share price is down 10.6% so far in 2017. It retracted 9.2% in 2016.Steinhoff’s 2016 high of R97 now seems increasingly remote from Tuesday’s R63 as the market grapples with the fallout of Wiese’s takeover plan. Takeovers tend to present unexpected problems. In this instance, the market was sceptical about Steinhoff’s acquisitions of Mattress Firm in the US and the UK’s Poundland. Some analysts say Steinhoff paid too steep a price for the businesses. Goldman Sachs responded by changing its buy rating at the end of 2016 to neutral, with limited upside potential. Steinhoff’s quarterly update to end-December failed to inspire confidence as supply-chain problems hit Mattress...
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