Shoprite and Steinhoff released a joint SENS yesterday withdrawing the cautionary announcement around their proposed merger. The companies announced the termination of negotiations after the PIC, Titan and Steinhoff failed to reach an agreement on the ratio that would apply to the share exchange. Accordingly, shareholders of both Steinhoff and Shoprite have been advised caution is longer required by shareholders when dealing in their securities. In response to the announcement the share prices of Shoprite and Steinhoff ended up +8.64% and +4.96% respectively. While details were always sketchy around the transaction, it’s likely the upward movement of both counters is related to the uncertainty premium unwinding. Speculation from analysts pegged to potential dilution at larger than 5% and the fear around the treatment of minority shareholders was significant. You can email the desk on firstname.lastname@example.org for our 12 month target prices on the stocks.
Steinhoff added another 2.75% yesterday with the share closing R2.03 higher. The positive close was the fifth gain in the last seven sessions, following its recent update. The company has posted a R14.40, or 23.16%, gain from its near-term lows of R62.16 on the 5th of December. (If you’re interested in reading a full analysis of the update just email email@example.com and the desk send through a full breakdown.) As it stands, the share price is up 1.47% for the week, after posting an 18.33% gain during last week. This upwards momentum looks unlikely to continue at its current pace, but technical analysts are predicting a push towards the R84.00 mark.
According to Christo Wiese, in an interview with Reuters, it would be a “natural development” for international retail group Steinhoff to take over Shoprite, Africa’s biggest supermarket chain. Dr Wiese is the largest shareholder in both Shoprite and Steinhoff. Bringing the two together would allow him to add groceries to his sprawling discount empire. The merger, if it happens, would also pull together Wiese’s retail assets under one roof following Steinhoff’s nearly $6 billion acquisition in 2014 of the magnate’s budget clothing retailer Pepkor and create a global retail giant worth at least R400 billion rand. Steinhoff also released a SENS announcement yesterday, whereby it confirmed that the group would undertake a capital raising. See the full details in today’s note.
On Wednesday, SNH traded sharply lower, down 5.7% at R88.22 per share, after the group released a financial update for the year ended 30 June 2016. In it, the group advised shareholders that it recorded a 33% increase in revenue to €13.1bn. In addition, the group saw its operating profit grow by 32% to €1.5bn, while the group operating margin remained mostly unchanged at 11.3%. During the financial year, Steinhoff started trading on the Frankfurt Stock Exchange. As a result, the group has highlighted the fact that its results were negatively impacted by the weakening of the rand against the euro. Lastly, Steinhoff’s full results are set to be released on the 7th of September 2016.
Steinhoff gained 1.96% on Monday to settle at R87.88 per share, helped along by a surge in both local and European markets. In addition, the group received a boost following news it has set its sights on Poundland as its next target. Steinhoff, which already owns Harveys and Bensons for Beds in the UK, has acquired 22.78% in Poundland in the open market. As it stands, the group has confirmed any possible offer will be made in cash, with 13 July as the deadline to make a formal offer. While Poundland has scale, the group has suffered a large decline in its share price over the last year. The group showed an 84% drop in pre-tax profits in its latest results released on Thursday.
After an extremely busy day last Thursday, in which Steinhoff released no less than three SENS announcements, Steinhoff released yet another SENS on Friday relating to its indirect acquisition of Darty shares. In it, the group advised shareholders that Steinhoff Finance Holdings GmbH, a wholly-owned subsidiary of Steinhoff International Holdings N.V. has acquired a further 4,814,061 shares in Darty at a price of 160 pence. As a result, a total of 108,020,038 Darty shares are now held by the group, representing 20.4% of the entire issued share capital of Darty. Remember the group had formerly acquired just over 100 million shares from Majedie Asset Management Limited, Schroder Investment Management Limited, Standard Life Investments and UBS Asset Management at 138 pence, a full 15% lower. Let’s see if FNAC counters the present offer. If Steinhoff decides not to take control of the company, it could still bank a tidy trading profit.
On Tuesday, Steinhoff announced it had submitted an offer to acquire a substantial part Cauval’s bedding business. Cauval, which is based in France, was placed into receivership in February and currently boasts group sales of around €380mn. As it stands, Steinhoff is considered to be one of ten companies who placed an offer for Cauval on Monday. This move further reaffirms Steinhoff’s inclination to invest in European companies, after the group, through its Conforama subsidiary, offered $975mn for Darty in March. By the close of trade, Steinhoff had fallen 1.87% to trade at R94.25, but is still up around 10% for 2016.
On Friday, Steinhoff International ended marginally lower, down 0.78%, at R78.80. However, after European markets closed for the day, Steinhoff released a statement confirming it had made a £1.4bn bid to acquire Britain’s Home Retail Group. The all-cash offer, which values Home Retail at 175 pence per share, is substantially higher than the 161.3 pence offer in cash and stock Sainsbury agreed to pay earlier this month. A takeover of Home Retail would further increase Steinhoff’s exposure to Europe, while also marking the group’s largest acquisition since it bought Pepkor Holdings for R62.8bn in 2015.
Continue reading Steinhoff makes £1.4bn bid for Britain’s Home Retail Group