NIGERIA – Africa’s largest retailer Shoprite Holdings is said to have found a buyer for its Nigerian subsidiary, Retail Supermarkets Nigeria Limited.
Reports by Reuters indicate that Nigerian property group Persianas emerged the winner of a bidding process organized to find a buyer for the business.
The Palms shopping mall owner who also houses a Shoprite store in the West African country’s commercial capital, Lagos, is arranging debt for the buyout.
While the asset has been valued by the seller at N30 billion (US$73 million), it’s not yet clear how much Persianas has agreed to pay, indicates Bloomberg.
The deal is subject to regulatory approval and its finalization will mark the end of Shoprite’s direct control of the business which spans over 15 years but its aimed to formulate a franchise agreement for the brand to remain in Nigeria as well as a services agreement to provide support to the new owner.
Shoprite has more than 25 retail stores across Nigeria, including some of the largest in West Africa.
MBO Capital and KPMG advised Persianas while FBN Quest, a unit of FBN Holdings, is arranging debt. Shoprite was advised by Investec.
South Africa’s biggest grocer has been reviewing its long-term options across Africa as currency devaluations, lower commodity prices and high inflation have hit household incomes and weighed on earnings.
This has led to the company exiting Kenya and Nigeria, restricting capital allocations to its supermarkets outside South Africa and instead investing that money in its home business to take advantage of its dominance in the discount grocery market and growing share in premium food.
Nigeria, Africa’s most populous country is grappling with double-digit inflation. Galloping food prices have heaped financial pressure on households already faced with a shrinking labour market and a stagnant economy at a time of mounting insecurity.
Over the past decade, South African retailers Woolworths Holdings Ltd., Truworths International Ltd. and Mr Price Group Ltd. have all opted to walk away from the country.
Shoprite shifting focus to its home market reported 4.7% rise in half year group sales to R83.4 billion (US$5.57 billion) despite liquor sales taking a knock on Covid19 restrictions in its South African supermarkets and currency devaluations eroding footprint across the rest of the continent.
Its core Supermarkets Republic of South Africa (RSA) segment, making up 78.0% of Group sales and represented by 1 685 stores across its major trading banners Shoprite, Usave, Checkers, Checkers Hyper and LiquorShop increased sales by 5.6%.
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