(HERALD) Shoprite puts R167m OK Zimbabwe deal on hold

Shoprite puts R167m OK Zimbabwe deal on hold
Business Reporter

SHOPRITE, South Africa’s biggest retail chain, has put on hold a R167 million deal to buy a stake in OK Zimbabwe Limited, a move that has already been described by local analysts as having no effect on economic turnaround efforts.

Executive director Brian Weyers said in a statement that they were no longer pursuing further investment opportunities in Zimbabwe in the short to medium-term sighting socio-economic and political uncertainty.

"Due to the current socio-economic and political uncertainty in Zimbabwe, Shoprite has decided not to engage in further investment opportunities in that country," he said.

But early this month, the company had said Zimbabwe was the place to be.

Analysts yesterday said Zimbabwe was more interested in investments into production as opposed to retail. Presently Zimbabwe boasted of local retail giants such as Spar outlets, Afrofoods, Savemor, TM supermarkets and OK Zimbabwe, among others.

"Zimbabwe has more than enough retail outlets so the economy is not worried about Shoprite’s decision. What we need is real investment in production to anchor the economy," said one commentator.

South African investors have been making inroads into Zimbabwe following the formation of the inclusive Government, which has seen the country starting to regain its image as a preferred investment destination.

Shoprite, which posted a 27 percent jump in profit in the year through June, operates 102 stores in 16 countries outside of South Africa, including a grocery outlet in Bulawayo that was opened in 2000. Shoprite said in August that it was "considering" buying businesses in Zimbabwe to expand its operations to the rest of the continent.

It has been holding behind the scenes negotiations with OK Zimbabwe with the intention of taking over the retailer.

OK Zimbabwe also issued a cautionary statement advising shareholders to exercise caution and to consult their professional advisors in dealing with their shares in the company.

The South African retailer had gone as far as sending its company executives to tour the local retailer’s branches as part of familiarising with its operations.

Renaissance Capital had valued OK Zimbabwe at R334 million. The announcement by Shoprite comes at a time when the company recently announced that "Zimbabwe was a safe investment destination’’.

Its chairman Cristo Wiese had said his company would go ahead with the deal, as their investments would not be at risk.

"We are like good Africans, we are confident a solution (regarding KMAL) will be found and we believe the whole of Southern Africa will enter a new era over the next five to 10 years," Wiese was quoted as saying then.