Steinhoff snaps up Harris Scarfe owner

Harris scarfeSteinhoff International will purchase South African retail owner, Pepkor, in a deal worth $6.7 billion.

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The acquisition is expected to strengthen Steinhoff’s position within the discount retail market segment.

In Australia, Pepkor owns the Harris Scarfe, Best & Less, Kids Store, Store & Order, and Mozi chains. Earlier this year it purchased debt laden New Zealand chain, Postie Plus.

Pepkor has a retail presence in 16 countries and has revenue of $4 billion a year. Sixty three per cent of its business is generated in South Africa, five per cent from the rest of Africa, 23 per cent in Australia, and nine per cent in Eastern Europe.

Steinhoff is a South African retail operator with a strong focus on furniture. In Australia it owns Freedom, Snooze, and Pocco.

Steinhoff will secure a 92.3 per cent share in Pepkor with the purchase of each of the stakes of Titan Premier Investments, Brait Mauritius, and Pepkor management

It will acquire Titan’s interest in Pepkor of 52.47 per cent,  37 per cent from Brait, and 2.8 per cent from Pepkor management. The remaining shares in Pepkor are held by Pepkor management.

A statement by Steinhoff said discount retailers have benefited from the recent “flight to value” trend which has been most noticeable among less affluent customers.

“Customers across the spectrum are trading down as discount retailers have become more socially acceptable, offering improved variety and quality,” the company said.

“Steinhoff believes that the acquisition will further enhance its position as a leading listed global vertically integrated retail group in terms of size, geographic spread, operating scale, and product diversity.”

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