Shoprite Deal Unravels as Billionaire Scurries to Save Steinhoff

(Bloomberg) -- The spectacular collapse in the share price of Steinhoff International Holdings NV is hindering Christo Wiese’s plans to pool his African retail assets.

The South African billionaire has had to pull out of a deal that will give Steinhoff Africa Retail Ltd. a 23.1 percent stake and a 50.6 percent voting interest in Shoprite Holdings Ltd., the continent’s largest grocery chain. Steinhoff Africa Retail, or STAR, is now in talks with the manager of pensions for South African civil servants and the company’s black investors about exercising the option to take the stake, it said in a statement on Friday.

Shares in Cape Town-based Shoprite, which Wiese controls through voting rights that accrue to various entities tied to him, fell 5.7 percent to close at 210.69 rand in Johannesburg. STAR rose 10 percent 18.50 rand.

“The market is worried that Christo Wiese will now have to sell his shares in Shoprite for liquidity,” said Wayne McCurrie, a money manager at Ashburton Investments Management Co. in Johannesburg. “The deal that was made two weeks ago has fallen through.”

Shares in Steinhoff International have plunged more than 80 percent since Chief Executive Officer Markus Jooste resigned and the Frankfurt-listed company appointed PwC to probe potential accounting irregularities. Wiese, 76, stepped down from his role as chairman of the owner of Mattress Firm in the U.S. and Conforama in France on Thursday to resolve questions over any conflict of interest as the company fights for survival. 

Shoprite Deal Unravels as Billionaire Scurries to Save Steinhoff

Wiese’s net worth has slumped by $4 billion to $2 billion this year, according to the Bloomberg Billionaire’s Index.

STAR’s board will enter into discussions with Public Investment Corp., which manages pensions on behalf of South African government employees as the largest money manager in Africa, and Lancaster, a group of black investors who own about 8.8 percent of the retailer, STAR said.

“It essentially means that that the deal they wanted to make falls apart where STAR would have taken control of Shoprite,” said Byron Lotter, an equities analyst at Vestact Ltd. in Johannesburg “Christo Wiese, PIC and others were going to sell all their Shoprite shares to STAR and give STAR control over Shoprite. That is not happening anymore, and it’s best for Wiese to hold Shoprite.”

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