Shoprite Nigeria is awaiting FCCPC approval to conclude its sale to Nigerian property development company, Persianas. Nairametrics reported last year that Shoprite South African holdings was looking to spin off its Nigerian assets as it moves to decouple struggling businesses outside South Africa. Shoprite also sold off its interest in Kenya.
According to sources with knowledge of the matter, the Nigerian sale is awaiting regulatory approval from FCCPC an acronym for the Federal Consumer Competition Protection Commission, a relatively new regulatory body that wields enormous power including approving mergers and acquisitions that affect the interest of consumers. It is unclear how long the transaction will take to be consummated.
Shoprite also confirmed the transaction close was awaiting FCCPC approval in its latest earnings release.
“The Group confirms that the terms of sale have been concluded for the disposal of a 100% equity stake in its Retail Supermarkets Nigeria Ltd subsidiary. The transaction has been lodged with the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) for approval. Management expects the transaction to be approved by the end of the 2021 financial year.” – Shoprite.
Recall that in April Nairametrics reported that the Federal Competition and Consumer Protection Council (FCCPC) had said it was not aware that Shoprite was exiting Nigeria, but that there was a pending application for a merger/acquisition involving it. This triggered a possible regulatory barrier for a transaction that was announced last August.
Information reaching Nairametrics also suggest that while Shoprite exits its equity stake in its Nigerian subsidiary, it will offer a franchise arrangement with the Nigerian owners ensuring that the operations continue with the widely ubiquitous Shoprite brand.
“Management is in the process of concluding a franchise agreement for the Shoprite brand to remain in Nigeria as well as an administration and services agreement to provide support to the new shareholders with operating the outlets.” – Shoprite.
Nairametrics estimates the purchase consideration for Shoprite Nigeria’s sales to be about N25 billion while a Bloomberg report estimates around N30 billion. Shoprite owners Persianas are also the owners of the Palms Shopping Mall. Nigerian property group, Persianas, will take over Shoprite’s operations in Nigeria after a bidding process was concluded.
Shoprite is Nigeria’s largest retail supermarket chain and employs over 2000 Nigerians. It has been in the country for about 15 years. It currently competes with the likes of Spar and other homegrown retail chains with a growing presence countrywide.
The group reported gross revenue of R2.74 billion or $161.4 million from Nigeria in 2020, a drop from R2.917 billion in 2019. It also reported a loss after tax of R87 million in the period under review. Loss after tax in 2019 was R345 million.