It is confirmed that Persianas, the owners of Palms Shopping Mall, have acquired Shoprite, the South Africa African Company which is set to exit the Nigerian market for good.
It would be recalled that Persianas was chosen as the preferred bidder after a bidding process involving applications from interested investors according to reports by Reuters which also states that the deal will make the investor a direct owner of Shoprite store in Palms Shopping Mall and other mall rivals.
According to an evaluation by Bloomberg, the acquisition is expected to be around N30 billion, but as expected in transactions of the nature, Shoprite South Africa is unwilling to provide information about the exact acquisition figures.
One information that appears certain at this point is that Persianas intends to use debt to complete the acquisition and it has contacted FBNQuest to manage the debt arrangement.
The South African retailer has set the fourth quarter of this year (October to December 2021) to wind down its operations in Nigeria after it failed to actualize its initial plan to do so in the fourth quarter of 2020 due largely to the challenges posed by the COVID-19 pandemic.
RovingNaija recalls that the news about the planned exit of Shoprite from Nigeria was first published in August 2020 when the company confirmed its exit from Nigeria. Among others reasons, the incessant wave of reprisal actions (in Nigeria) for the many xenophobic attacks on Nigerian citizens in South Africa, coupled with the -6.3% year-on-year sales decline, were enough indications that the Nigeria franchise was running through murky waters.
The media also reported in June 2020 that the company was on the verge of exiting the Nigeria business space with the reported sale of all or some of its shareholdings in the Nigerian network.
CEO of the Group Pieter Engelbrecht, also hinted that the company is considering exiting its franchise in some underperforming countries. (read, Nigeria). And this was expected because the company also reported an 8.1% loss in sales while the business at the headquarters in South Africa continued to record impressive sales figures.
Plus, the constant threats on South African businesses such as MTN, MultiChoice, Shoprite in Nigeria may not have gone unnoticed in the Rainbow country.
But while MultiChoice and MTN are able to ride the constant regulatory and non-regulatory storms in Nigeria, Shoprite appears not to have the stomach for it. This left the business wide open to a hostile takeover and Persianas obliged them.
Shoprite opened its first stores in 2005 and developed it into 26 branches in the country, becoming the market leader within a short stretch. With the challenges of food supply in the country due to the COVID-19 pandemic and the war of attrition between cattle herders and farmers all over the country, it remains to be seen how Persianas intends to turn around the negative perception and fortunes of an acquired business that ideally, had no business throwing in the towel in Nigeria.