By Jeph Ajobaju, Chief Copy Editor
Shoprite has struck a deal with Persianas and is awaiting official approval to sell off its stake in Nigeria and concentrate on its home market, after recent poor returns from its highbrow outlets in Lagos and other cities in Africa’s biggest economy.
The grocery seller has already sold off its interests in Kenya and wants to focus more on South Africa once it concludes the sale to Persianas, a Nigerian property development company.
Shoprite reported losses in 2019 and 2020.
Nairametrics quoted sources as saying that the deal between Shoprite and Persianas is awaiting the approval of the Federal Consumer Competition Protection Commission (FCCPC).
FCCPC is a new regulatory body that wields enormous power, including approving mergers and acquisitions that affect the interest of consumers. It is unclear how long the transaction will take to be completed.
Shoprite confirms report
Shoprite confirmed in its latest earnings release that the transaction is awaiting FCCPC approval.
“The Group confirms that the terms of sale have been concluded for the disposal of a 100 per cent equity stake in its Retail Supermarkets Nigeria Ltd subsidiary.
“The transaction has been lodged with the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) for approval. Management expects the transaction to be approved by the end of the 2021 financial year,” Shoprite said.
The FCCPC had said in April that it was not aware that Shoprite was exiting Nigeria, but that there was a pending application for a merger/acquisition involving it. This triggered a barrier for a transaction that was announced last August.
Franchise arrangement
However, while Shoprite exits its equity stake in its Nigerian subsidiary, it is expected to offer a franchise arrangement with Persianas to ensure operations continue with the ubiquitous Shoprite brand.
“Management is in the process of concluding a franchise agreement for the Shoprite brand to remain in Nigeria as well as an administration and services agreement to provide support to the new shareholders with operating the outlets,” Shoprite added.
Nairametrics estimates the purchase at about N25 billion, Bloomberg estimates it at around N30 billion.
Persianas, owners of Palms Shopping Mall in Lagos, is expected to take over Shoprite’s operations in Nigeria when the process is concluded.
Shoprite is Nigeria’s largest retail supermarket chain and employs over 2,000 Nigerians. It has been in the country for about 15 years, and currently competes with Spar and other homegrown retail chains with a growing presence nationwide.
The group reported gross revenue of R2.74 billion or $161.4 million from Nigeria in 2020, a drop from R2.917 billion in 2019.
It also reported a loss after tax of R87 million in 2020 besides R345 million loss after tax in 2019.
