Friday, 20 August 2021
Massmart today announced the sale of certain non-core assets to Shoprite Checkers for a total consideration of R1.360 billion (one billion three hundred and sixty million rand).
The deal is consistent with announcements, via an operational update in February 2021 and again at Massmart’s annual financial results presentation in March 2021, in which the Group disclosed that it would reduce exposure to non-core operations whilst prioritizing investment in high-returning trading assets.
The transaction, which remains subject to the relevant regulatory approvals, will see ownership of Cambridge Food, Rhino and Massfresh (comprising The Fruitspot and a meat processing facility), as well as 12 Cash & Carry stores transferred to Shoprite Checkers. It is expected that the transaction will close early in the first quarter of 2022.
Financial proceeds will be used to pay down drawn bank facilities, invest in eCommerce, and also in merchandise areas in which Massmart is the market leader, namely, General Merchandise, DIY and wholesale food & liquor.
Commenting on the announcement, Mitch Slape, Massmart Group CEO, said: “The sale marks another step in the Group’s portfolio optimization process and will, amongst other benefits, free-up management time to enable increased focus on leveraging Massmart’s core merchandise and market strengths.”
The sale will be effected via as a Section 197 process. Affected staff members will therefore continue to be employed by the new owner on terms and conditions that are, on the whole, not less favourable than their existing employment contracts.
“We are of the opinion that these are sound businesses with good long-term prospects. They are being sold as going concerns and, in the hands of a well-established and efficient fresh food and grocery retailer, will reach their full potential, thereby saving jobs and protecting livelihoods,” added Slape.