South African grocery retailer Shoprite has reached an agreement to sell its furniture business, including the OK Furniture and House & Home brands, to Pepkor Holdings.
The transaction, which will be settled in cash, represents approximately 4% of Pepkor's market capitalisation - around R3.2bn ($179m), according to reports via Reuters.
The acquisition will transfer more than 400 stores across several African countries to Pepkor, excluding operations in Angola and Mozambique.
The deal also encompasses the Shoprite Furniture credit loan book, related insurance arrangements, inventory and certain fixed assets.
Pepkor anticipates that the integration will unlock synergies and efficiencies within the supply chain, logistics and financial services operations.
Pepkor already operates a Lifestyle business unit with six household furniture, appliances and consumer electronics retail brands.
This transaction will allow Pepkor to enhance its value proposition and expand its presence in regions where it is currently under-represented.
Pepkor stated: “Combining Shoprite Furniture with Pepkor Lifestyle will enable key synergies and efficiencies to be unlocked within the supply chain, logistics and financial services operations through leveraging improved scale.
“Pepkor Lifestyle will expand its customer base and retail footprint while integrating Shoprite Furniture operations into its existing logistics network. Pepkor's management team has the expertise and capacity to successfully incorporate the Shoprite Furniture business into the group.”
Sales in Shoprite Holdings' furniture division were R7.2bn, or 3% of group sales, for the 52 weeks ended 30 June 2024.
The furniture segment’s store base fell by four over the past 12 months to end the period with 430 stores on a net basis.
Shoprite chief executive officer Pieter Engelbrecht said: “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.”
