Shop Rite Holdings Limited, the South African company which has stores in many states in Nigeria, says it is pulling out of the country.
The company entered the Nigerian market in December 2005.
In an “Operational and Voluntary Trading Update (52 Weeks Ended 28 June 2020)” it released on Monday, Shop Rite blames its decision to quit Nigeria on the coronavirus pandemic which has disrupted major businesses globally. It added that it had also been approached by “various potential investors”.
“Despite difficult circumstances, in a year incorporating the COVID-19 lockdown and accompanying regulations governing trade, transport and operations, the Group increased total sale of merchandise for the 52 weeks to 28 June 2020 (including the impact of hyperinflation in the prior year) by 6.4% to approximately R156.9 billion. Like-for-like growth for the year was 4.4%.
“Following approaches from various potential investors, and in line with our re-evaluation of the Group’s operating model in Nigeria, the Board has decided to initiate a formal process to consider the potential sale of all, or a majority stake, in Retail Supermarkets Nigeria Limited, a subsidiary of Shoprite International Limited.
“As such, Retail Supermarkets Nigeria Limited may be classified as a discontinued operation when Shoprite reports its results for the year. Any further updates will be provided to the market at the appropriate time.”
According to the TheCable, there is a corporate tussle among three entities to bite into the larger stake of the retailer.
Persianas Nigeria Limited, a property development company, owned by Tayo Amusan, is said to be the preferred bidder for the Shoprite stake.
Amusan is a businessman who invested in property development. Some of his properties house the stores of Shoprite.
Amusan founded Persianas in 1990. In 2004, he launched, The Palms. Owing to the success of The Palms in Lagos, he floated three additional malls in Enugu, Kwara, Ota and Ibadan.
Amusan sits on the board of several Nigerian companies, including African Paints Nigeria Limited, and he is also the chairman of Resourcery Limited.
The two other contenders are said to be another property development company but with links to a foreign country, and a South African company backed by South Africa’s pension fund. Though Amusan is mooted to be the favoured investor, the other bidders are pushing negotiations hard.
TheCable understands the deal will involve Shoprite retaining the management of its chain of operations, brand name, trademarks, and supply chain.
In an internal memo of July 31 seen by TheCable, Carl Erickson, general manager of the retailer, informed employees that the revision in the business is to make the company ‘’truly Nigerian’’.
The memo read: “The expansion of the retail business in Nigeria to a greater consumer market should remain everybody’s shared vision. It has, however, become apparent that the best manner in which to do this is by engaging Nigerian investors who share in this vision. In so doing we will be creating a truly Nigerian business run and owned by Nigerians for the Nigerian market.”
