South African retailer Spar Group to acquire controlling stake in Piotr Pawel

SOUTH AFRICA – Spar Group, a South African grocery chain said that it is in the final stages of talks to buy a controlling stake in Polish deli and supermarket chain Piotr i Pawel group as part of efforts to expand in Europe.

Spar, which has more than 4 000 stores, runs its business majorly in southern Africa but has also expanded into Ireland, southwest England and Switzerland.

The acquisition of the stake in Piotr i Pawel would expand its presence in Poland, which comes at a time when the European country is enjoying a period of robust economic growth and low unemployment.

Spar said it had been awarded a licence to operate its brand in Poland, which operates 77 delicatessen and supermarket stores and a wholesale distribution network.

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However, according to a report by Moneyweb, the retailer did not give details on the value of the deal, which is subject to regulatory approval.

Indications are that the takeover of the business will ‘almost certainly’ lead to the end of the Piotr i Paweł name, with many of the stores likely to transfer to the Spar banner in time.

The transaction will represent the latest acquisition as the group furthers its presence in Europe.

In Switzerland, it operates chiefly in the German-speaking part of the country, with 39 company-owned and 142 independent stores.

Despite tough trading markets Spar reported Revenues rose 9% to R54.3 billion while headline earnings per share (Heps) fell by 3.4% to 523.6 cents for the six months to the end of March.

On a normalised basis, Heps grew by 7.5%, which the company said are adjusted for finance costs, which included significant foreign exchange effects on the translation of liabilities to acquire minority interests in the Irish and Swiss businesses,.

In Southern Africa, its biggest market, sales excluding the S Buys pharmaceutical business rose 7.6%, amidst the weak consumer spending and low inflation levels.

However, the results were boosted by revenue growth of 19.3% in the liquor business and 8.3% in the building materials business, the retailer said.

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In South Africa, the business operates more than 2,000 stores, while it also has a presence in Angola, Zambia, Botswana, Namibia, Mozambique, Malawi and Lesotho.

South African retailers have struggled to significantly lift sales and profit at home to double-digit numbers as elevated household debt, higher fuel prices and an increase in value-added tax squeezes consumers’ income.

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