With talks of offloading Steinhoff’s African operations to SHP underway, we estimate that Steinhoff’s Africa operations could be worth between ZAR68.2bn and ZAR100bn, which is a very sizeable business for Shoprite to acquire.
Compared to IKEA, we find that SNH’s operating margins are tracking quite well and offloading the African division could improve margins further as it will not be dragged down by the SA household goods division.
We review the merchandise of its three UK brands and find there to be some overlap, and highlight the risks associated with splitting the apparel business into two separate entities (Europe and Africa).