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Should I sell SHP ? I am tempted.

Careless Whisper ..

Orca, just click the search mag. glass top right, then follow the steps I mentioned.

Aw shucks!  Why not? ... no desire to retire

Some more info .. (who knows, maybe not so 'bad' afterall?)

Shoprite and the African operations of Steinhoff are to be merged into a new group called Retail Africa, major shareholders of both retailers Christo Wiese and the Public Investment Corporation (PIC) announced on Wednesday.

The deal will result in Shoprite acquiring Steinhoff’s clothing chains which include Pep, Ackermans, Shoe City and Tekkie Town in exchange for shares.

Shoprite will also buy the furniture and appliance retailers that Steinhoff owns via JD Group. These include Russells, Bradlows, Rochester, Incredible Connection, Hi-fi Corporation and Sleepmasters.

Furthermore, Shoprite will acquire Steinhoff’s hardware chains Buco, Pennypinchers, Timbercity and Hardware Warehouse.

Retail Africa would be the continent’s largest retailer with an annual turnover of R200bn, employing 186,000 people, it was noted in Wednesday’s statement said.

Steinhoff proposes to acquire Wiese’s Shoprite shares, held in a company called Titan, and those of the PIC in exchange for Steinhoff shares at a ratio still to be agreed.

The deal is likely to trigger a mandatory offer to Shoprite shareholders who will be offered Steinhoff shares at the same ratio as Wiese and the PIC will receive.

The share price of the target company, Shoprite, jumped 3.2% to R199 while Steinhoff’s fell 5.5% to R71.83 after the announcement.

" It is expected that the proposed transaction will further enhance Retail Africa’s position as an employer of choice and it is also anticipated that the proposed transaction will not result in any job losses. The combined group’s growth plans could lead to future job creation in various countries," the statement read.

SHP SNH 201612140027A
Steinhoff/Shoprite -Joint detailed cautionary announcement relating to the establishment of  African retail champion

Steinhoff International Holdings N.V.                        Shoprite Holdings Limited
(Incorporated in the Netherlands)                            (Incorporated in the Republic of South Africa)
(Registration number: 63570173)                              (Registration number: 1936/007721/06)
Share Code: SNH                                              JSE Share Code: SHP
ISIN: NL0011375019                                           NSX Share Code: SRH
("Steinhoff" or the “Company”)                               ISIN: ZAE000166997
                                                             ("Shoprite")

JOINT DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE ESTABLISHMENT OF AN AFRICAN RETAIL CHAMPION

1.   Background
     Shareholders of Steinhoff and Shoprite are hereby advised that the largest shareholders of both
     companies, namely the Public Investment Corporation SOC Limited (“PIC”) and Titan Premier
     Investments Proprietary Limited (“Titan”) (a company ultimately controlled by a family trust of Dr.
     Christo Wiese) have initiated and facilitated discussions between the Steinhoff and Shoprite boards
     of directors regarding the potential combination of their respective African retail businesses, with the
     objective of establishing a diversified African retail business of significant scale and international
     geographical reach that could be regarded as the retail champion of Africa (“Retail Africa”)
     (“Proposed Transaction”).

     The vision to create Retail Africa, which will be a formidable entity, having its roots firmly entrenched
     in Africa, is shared by both the PIC and Titan. Accordingly, both shareholders have indicated that
     they are fully supportive of an initiative which could lead to the creation of Retail Africa.

     In terms of the Proposed Transaction, it is envisaged that Shoprite will acquire Steinhoff’s African
     retail operations, consisting of:

         -   Pepkor Africa: Pep SA, Ackermans, Speciality Group, including Shoe City, John Craig,
             Refinery and Dunns, as well as the Pep and Ackermans African operations;
         -   JD Group: Russells, Bradlows, Rochester, Incredible Connection, Hi-fi Corporation,
             Sleepmasters and financial services;
         -   Steinbuild, including Buco, Pennypinchers, Timbercity and Hardware Warehouse; and
         -   Tekkie Town (collectively known as “Steinhoff Africa Retail”).

     Shoprite will issue new ordinary shares to Steinhoff in consideration, pursuant to which Steinhoff will
     receive a significant equity interest in Shoprite. The value for Steinhoff Africa Retail will be negotiated
     taking into account the best interests of both Steinhoff and Shoprite shareholders.
     
     From Shoprite’s perspective, the Proposed Transaction is expected to position the combined
     businesses of Retail Africa as the leading multi-format discount retailer on the African continent.
     Retail Africa, locally bred, will have the required size and scale to compete with any other
     international retailer, making it a compelling value proposition for Retail Africa’s value conscious
     African customer base. As the largest retailer in Africa, Retail Africa will employ approximately
     186,000 people. It is expected that the Proposed Transaction will further enhance Retail Africa’s
     position as an employer of choice and it is also anticipated that the Proposed Transaction will not
     result in any job losses. The combined group’s growth plans could lead to future job creation in
     various countries.

     In addition to the above, Steinhoff has entered into an in principle agreement with the PIC and Titan
     to acquire their interests in Shoprite as part of the Proposed Transaction in the form of a Steinhoff
     share-for-Shoprite share exchange, subject to an exchange ratio to be agreed (“the Exchange
     Ratio”) which may ultimately result in Steinhoff acquiring control of Retail Africa. This Exchange
     Ratio will be negotiated taking into account the consideration price for Steinhoff Africa Retail on the
     basis that the Proposed Transaction will not be earnings dilutive to Steinhoff shareholders.

     In addition, Steinhoff may be required to extend a mandatory offer based on the same Exchange
     Ratio to other Shoprite shareholders to acquire their Shoprite ordinary shares (“Offer”). If this is the
     case, such Offer will be in the form of a Steinhoff share-for-Shoprite share exchange, at the
     Exchange Ratio. Shoprite shareholders will, however, at all times have the election right to retain
     their exposure to listed Retail Africa directly or be free to choose to accept the Offer, should it be
     made.

     The boards of directors of both Shoprite and Steinhoff remain fully supportive of maintaining Retail
     Africa’s separate listing on the Johannesburg Stock Exchange and are committed to the preservation
     of an appropriate free float of Retail Africa ordinary shares.

2.   Rationale
     The Proposed Transaction will result in Steinhoff’s African exposure being held through a strategic
     interest, within a separately listed entity with sufficient liquidity, which can be independently valued
     as an African retail champion. Additionally, through Retail Africa, Steinhoff’s African assets will be
     exposed to additional growth opportunities. The Proposed Transaction would allow Steinhoff, as a
     group, to strengthen its exposure and relevance to the African consumer, through the diversified
     global retail platform that would include Africa’s leading fast moving consumer goods, household
     goods and furniture retailer.

     It is expected that Retail Africa’s value proposition will provide its shareholders with a sustainable
     business where the growth and margin improvement opportunities are greater than the current
     individual businesses. The collective product ranges, expertise, infrastructure and size of Retail
     Africa will provide a unique and differentiated customer value proposition, operating in South Africa
     and in 14 African countries in which established infrastructure sharing will take place.

     These benefits would be likely to include: infrastructure and services sharing; product specialisation;
     product diversification; supply chain optimisation; customer loyalty, choice and convenience; and
     people management and benefits, such as, access to additional skills, and attracting retail talent.

     On a pro forma combined basis, Retail Africa would have had revenue and EBITDA of approximately
     ZAR200 billion and ZAR15 billion respectively, for the twelve month period ended 30 June 2016, with
     a strengthened balance sheet structure to support further organic and acquisitive growth in its
     diverse, but complementary constituent businesses.

3.   Cautionary
     The boards of directors of Shoprite and Steinhoff have agreed to enter into formal negotiations with
     regard to the Proposed Transaction which negotiations, if successfully concluded, may have a
     material effect on the price of both companies’ securities. Accordingly, shareholders of both
     Steinhoff and Shoprite are advised to exercise caution when dealing in their securities until further
     details pertaining to the Proposed Transaction are announced. Any forecast financial information
     contained in this announcement has not been reviewed or reported on by the companies’ external
     auditors.

Stellenbosch and Cape Town
14 December 2016

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