Shoprite to sell furniture business to Pepkor

Reuters/Sumaya Hisham

"The purchase consideration represents about 4% of Pepkor's market capitalisation and will be settled in cash," Pepkor, whose market value was R80.49bn on Monday, said in a statement.

That suggests a price of about R3.2bn.

Pepkor will get a business operating more than 400 stores in South Africa, Botswana, Lesotho, Namibia, Eswatini and Zambia. The deal excludes the Angola and Mozambique operations.

It also includes the Shoprite Furniture credit loan book and related insurance arrangements in addition to inventory and certain fixed assets, Pepkor said.

Shoprite CEO Pieter Engelbrecht said in a separate statement that the supermarket group wanted to focus on its core grocery operations.

"We found ourselves at a crossroads with the business's future growth and profitability hamstrung by the requirement of a level of investment that would have resulted in us re-directing capital and project management resources away from that currently dedicated to our food retail operations," he said.

Shoprite's furniture business contributed R7.2bn or 3% to Shoprite's group last full-year sales of R240.7bn.

Pepkor already runs a Lifestyle business unit that comprises six household furniture, appliances and consumer electronics retail brands.

"The proposed transaction will allow Pepkor to expand its value proposition through a complementary product mix in furniture, bedding, appliances and consumer electronics, while also expanding its presence in under-represented regions," it said.