Wiese calls off R35bn Shoprite deal

Reasons for the termination of the deal have not been given.
The Steinhoff crisis has tarnished Wiese's credentials as one of SA's most respected stewards of shareholder capital, stripped him of his billionaire status and reduced his 22.8% stake in Steinhoff to 20.5%. Picture: Moneyweb

Christo Wiese on Friday called off plans to sell his stake in grocer Shoprite to Steinhoff’s African arm, a day after he resigned from Steinhoff’s board in the midst of an accounting scandal.

Read: Christo Wiese steps down as Steinhoff chairman

More than $10 billion has been wiped off retailer Steinhoff’s market value in the last two weeks following the disclosure of accounting irregularities and also its chief executive’s exit.

Steinhoff, owner of more than 40 retail brands including Conforama, Mattress Firm and Poundland, in August revealed plans to buy a controlling stake in Shoprite through its African spinoff Steinhoff Africa Retail in a share deal worth R35.5 billion .

Wiese, the largest shareholder in both companies at that time, had said that he wanted to do this deal to consolidate his holdings.

But Steinhoff Africa Retail said on Friday the deal had been terminated. It did not give reasons for the decision.

The decision to call off the sale follows Wiese’s decision to quit as chairman of Steinhoff to reinforce independent governance and address any possible conflict of interest.

Steinhoff named Heather Sonn, a member of the supervisory board and its independent sub-committee, as acting chairperson.

The crisis has tarnished Wiese’s credentials as one of South Africa’s most respected stewards of shareholder capital, stripped him of his billionaire status and reduced his 22.8% stake in Steinhoff to 20.5%.

Banks have sold 98.4 million of the shares they used as security to lend Wiese 1.6 billion euros ($1.89 billion) to fund the purchase of additional shares in Steinhoff in September 2016.

Steinhoff did not name the bank or banks that have exercised their security rights over the stock. Citigroup, Goldman Sachs, HSBC and Nomura provided financing, which was backed by 628 million shares, or 15% of the company.

Steinhoff, which moved its primary share listing from Johannesburg to Frankfurt two years ago, has been under investigation for suspected accounting fraud in Germany since 2015. Four current and former managers are under suspicion of having overstated revenues at subsidiaries, prosecutors said.

It has previously said that the investigation related to whether revenues were booked properly, and whether taxable profits were correctly declared.

Steinhoff’s shares fell a more than 8% on Friday in Johannesburg and Frankfurt.

South Africa’s Independent Regulatory Board for Auditors (Irba) said on Friday it was investigating Steinhoff’s auditor, Deloitte South Africa, for the audits of financial years ended 2014-2016.

Liquidity hole

Steinhoffs Africa Retail said earlier on Friday it was preparing to repay $1.2 billion it owes to its parent, a move that would go a long way to plugging a $2.4 billion liquidity hole in the group.

Steinhoff Africa Retail appointed FirstRand’s Rand Merchant Bank to arrange the refinancing of about R16 billion in shareholder loans from the parent company.

Steinhoff is working with turnaround specialist AlixPartners to help maintain its liquidity. The company said on Friday it reduced its 25.5% stake in local investment conglomerate PSG Group to 16%, raising 4.7 billion rand.

Reuters had reported on Tuesday that Steinhoff was also considering selling its stakes worth $1.4 billion in PSG Group and the KAP Industrial to fill the hole in its balance sheet.

Steinhoff has also has also hired US investment bank Moelis & Co to help it prepare for a delayed meeting with lenders in London next week to discuss its financial health. 

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“Oh, what a tangled web we weave when first we practice to deceive.”

I would love to hear what Whitey Basson has to say. Surprised the journalists have not spoken to him.

It is not good enough to only investigate Steinhoff. Any enquiry needs to include Brait, Pepkor, Star and Stellar Capital with their interwoven deals. The entire board of Steinhoff needs to step down not just Wiese.

They also have the power to kill you economically as a black man. Like I have said once before, and continue to say again, they have the power to take your house, your car and your whole life like a thief in the night. They even have the power to manipulate our currency.

Please…so only the black people are affected?

Wiese does not want to tarnish his Shoprite holdings by putting it in Steinhoff – he has lost confidence in Steinhoff – probably knows what’s coming.

If you dare to hold a different ideological disposition that goes against their narrative, they have the power to kill your dreams and aspirations in your professional career.

“…stripped him of his billionaire status.” What are you saying. He’s still a billionaire?

I think the reference is to being a US$Billionaire

Must be difficult for him and his family.

Watch with interest what happens with SA stellar industrial KAP..

They are the same people who abuse their dominance across the sectors in construction, retail, financial services, media, agriculture, mining and FMCGs

hey garner hundreds of billions of rands off the backs of black consumers’ year in and year out. They hold the power to destabilize our economy and control the fluctuation of our currency.

They took a pile off me in the last two weeks and I’m not black, Emma. Does that mean I get my money back …. ? Please advise

It is high time the JSE outlaws the practice in SA that a number of connected parties acting in concert can by private voting pools run public companies as if they are still private companies.

I am fairly certain that in US, where a number of minorities act in concert, they have to register the pool and are precluded from voting on certain matters – for example where they are conflicted or on compensation where management is part of the voting pool.

You are either public and those pesky shareholders have their say, or you remain private without their capital.

End of comments.

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