South Africa’s Wiese cuts stake in grocer Shoprite after Steinhoff hit

SOUTH AFRICA – South Africa’s tycoon Christo Wiese has sold part of his stake in one of Africa’s biggest supermarket chain, Shoprite to raise US$264 million, boosting his finances after being dented by links to scandal-hit Steinhoff, according to a Reuters article.

He raised the funding through his company, Titan which sold 17 million shares, that is 2.9% stake, at US$15.25 each in Shoprite, a company valued at about US$10 billion.

The company has been on a transformation drive from just six outlets in the 1970s to hundreds across Africa, with a strong presence in Central, Southern and West Africa.

Wiese, who also is the largest shareholder in Steinhoff, with a stake of about 20% is reported to be the hardest-hit by the near-collapse of the firm.

Reuters reported nearly US$15 billion has been wiped off Steinhoff shares over the last six months after the owner of Mattress Firm and Conforama revealed holes in its accounts.

Steinhoff stock is said to have crashed more than 97% since reporting the financial irregularities on December 5, causing a slump in Wiese’s net worth to about US$2.17bn from close to US$5.07bn.

“This transaction is part of Titan’s ongoing investment and balance sheet management,” said a statement by Morgan Stanley, a global research and broking firm.

“Titan continues to believe in the long-term value of Shoprite and will remain a strategic investor in the company.”

The sale done via ‘accelerated bookbuild’ reduces Wiese’s stake in Shoprite from 17% in early December to about 11%.

Following the announcement, shares in Shoprite fell as much as 9% before recouping some of the losses to trade 5.3% lower at US$15.44.

Failed merger

In 2016, Wiese had sought to merge the grocer with Steinhoff, only for the talks to collapse amid a disagreement over valuations.

He wanted to merge the company’s operations on the continent with Shoprite’s, something that could have brought all his African retail assets under one business entity.

Amidst the accounting probe at Steinhoff, Shoprite CEO Pieter Engelbrecht said a merger between the two was not possible as they were looking for European expansion.

Ahead of the placement of shares, Titan owned about 79-million shares in Shoprite, representing about 14% of the grocery chain.

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