Category 2 Disposal Announcement

Massmart Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1940/014066/06)
JSE Share Code: MSM
ISIN: ZAE000152617

('Massmart Holdings" or "Company" or "Group")


CATEGORY 2 DISPOSAL ANNOUNCEMENT


1. INTRODUCTION

   Shareholders of the Company ("Shareholders") are referred to the Operational
   update and trading statement released on SENS on 19 February 2021 and the Group
   results for the financial year ended 27 December 2020 released on SENS on 8 March
   2021("Results Release"). As part of the Results Release, the Company advised
   that a strategic decision has been taken by the Group to reduce exposure to
   certain non-core assets, which included the disposal of the Cambridge Food, Rhino
   and Massfresh assets, as well as selected Masscash Cash and Carry assets.

   Shareholders are advised that on 20 August 2021 ("Signature Date"), a sale of
   business agreement was entered into between the Company, through its wholly-
   owned   subsidiaries   Massmart   Wholesale    Proprietary   Limited   ("Massmart
   Wholesale"), Massmart Retail Proprietary Limited ("Massmart Retail"), Cambridge
   Food Gauteng Proprietary Limited ("Cambridge Food Gauteng"), Fresh Food Direct
   Proprietary Limited ("Fresh Food"), Clidet No 1003 Proprietary Limited ("Clidet")
   and DD's Cash and Carry Proprietary Limited ("DD's Cash and Carry")
   (collectively, "Sellers"), K2019389785 (South Africa) Proprietary Limited
   ("Purchaser"), a subsidiary of Shoprite Checkers Proprietary Limited ("Shoprite
   Checkers") ("Agreement"), in terms of which the Company will, through the
   Sellers, sell, as a going concern, their respective businesses comprising of –
    i.   the Cambridge Food business and Rhino Cash and Carry business
         (collectively, ("Cambridge Food Business");
   ii.   the Fruitspot business and Massfresh Meat business (collectively,
         "Massfresh Business"); and
  iii.   12 Masscash Cash and Carry stores (collectively, "Selected Masscash Cash
         and Carry Assets"),
   (collectively, "Sale Businesses") to the Purchaser ("Disposal"), for the disposal
   consideration set out in paragraph 4 ("Disposal Consideration").


2. DESCRIPTION OF THE SALE BUSINESSES

   The Sale Businesses consist of wholesale and retail chains that are all focused
   on high-volume and low-cost distribution and are each reliant on high volumes
   and operational excellence as the foundation of price leadership, in the
   distribution of mainly branded consumer goods for cash.

   The Cambridge Food Business is owned by Massmart Retail, Cambridge Food Gauteng,
   DD's Cash and Carry and Clidet, in their respective proportions and consists
   of (i) Cambridge Food and (ii) Rhino Cash and Carry of which 56 (fifty-six)
   stores will form part of the Disposal. The Cambridge Food Business is a chain of
   food supermarkets in major urban and regional areas in South Africa supplying
   appropriate ranges of quality food and liquor products.

   The Massfresh Business is owned by Fresh Food and consists of –
    i.   The Fruitspot, being a wholesale and distributor of fresh fruit and
         vegetables with 3 (three) stores located in Johannesburg, Cape Town and
         Durban; and
   ii.   Massfresh Meats, being a processor and distributor of meat and meat
         products with a meat processing facility located in Benoni.
                                                                                


   The Selected Masscash Cash and Carry Assets consist of Browns & Weirs Cash &
   Carry – Idutywa, Browns & Weirs Cash & Carry - King Williams Town, Browns & Weirs
   Cash & Carry – Mount Frere, Ficksburg Cash & Carry, Nelspruit Cash & Carry, Piet
   Retief Liquors, Pretoria West Cash and Carry, Springs Cash & Carry, Thembani
   Wholesalers Pty Ltd, Vryburg Cash & Carry, Jumbo Cash & Carry – Durban and Qwa
   Qwa Liquors.

3. RATIONALE FOR THE DISPOSAL

   In our journey to becoming the healthiest and strongest retailer in Africa with
   the best long-term prospects we announced at our annual results presentation on
   8 March 2021, three key initiatives:

      •   Stabilise through the strong execution of our turnaround plan; –
      •   Focus through divestiture of non-core assets to drive sustainable,
          profitable growth; and
      •   Invest through accelerated growth in eCommerce, key categories and
          geographies.

   Pursuant to the review of our portfolio (which remains ongoing), management has
   determined that the Sale Businesses are non-core to the ongoing operations of
   the Group.   The Disposal adds a cash injection into the Group and frees up
   managements time to focus on the creation of shareholder value through the Invest
   initiative. The Disposal will also be effected in a responsible manner so as to
   preserve jobs via S197 of the Labour Relations Act No 66 of 1995. The Disposal
   is a key milestone in the Focus initiative as outlined above.

   We continue to deliver on all three initiatives and will provide a further update
   at our results presentation on 27 August 2021.

4. DISPOSAL CONSIDERATION

   The maximum Disposal Consideration in respect of the Sale Businesses is R1.36
   billion, payable in cash as soon as the Agreement becomes unconditional. The
   Disposal Consideration is subject to adjustment based on the assets held by the
   Sale Businesses at the targeted effective date of the Disposal. It is anticipated
   that the transaction will become effective in early 2022 once all the conditions
   precedent as outlined in paragraph 6 below have been met.

5. USE OF THE PROCEEDS
   The cash proceeds will be used to pay down drawn bank facilities.

6. CONDITIONS PRECEDENT

   The Agreement (and thereby, the Disposal) remains subject to the fulfilment or
   waiver (to the extent permissible) of the following conditions precedent
   contained in the Agreement:
    i.   the conclusion of written lease agreements in relation to the relevant
         immovable properties used in connection with the Sale Businesses and such
         lease agreements having become unconditional;
   ii.   the assignment of lease agreements or new lease agreements being entered
         into as required by the Agreement;
  iii.   the approval of relevant competition authorities in relation to the
         Disposal having been obtained;
   iv.   the Purchaser having delivered a duly executed undertaking letter by
         Shoprite Checkers to the representatives of the Sellers guaranteeing the
         obligations of the Purchaser under the Agreement;
    v.   the representatives of the Sellers having delivered a duly executed
         undertaking letter by the Company to the Purchaser guaranteeing the
         obligations of the Sellers under the Agreement; and
   vi.   the relevant Sellers being in possession of certain agreed licenses.
                                                                                   


7. FINANCIAL INFORMATION

   Set out below is the financial information of the Sale Businesses that has been
   extracted from the Group’s audited results for the 52 weeks ended 27 December
   2020 which were prepared in terms of IFRS. The financial information is the
   responsibility of the board and has not been reviewed or reported on by the
   Group’s external auditors.




                                                                                       Trading
                                                                               Profit/(Loss)
                                    Net Asset Value   Sales (Excluding
                                                                            (Before Interest
            Rm                           (Excluding       Intercompany
                                                                                 and Tax but
                             Intercompany Balances)             Sales)
                                                                         including Corporate
                                                                                Allocations)



Cambridge and Rhino                           988.4            8,266.5                 (363.5)


Massfresh                                     229.4              650.5                 (136.0)
Certain   Cash   &   Carry
stores                                        116.0            1,910.6                    12.9



8. CLASSIFICATION OF THE DISPOSAL

   The Disposal is classified a category 2 transaction as contemplated in the JSE
   Listings Requirements, as such, no approval from Shareholders is required.


   20 August 2021


   Financial advisor in relation to Cambridge Food, Rhino and Massfresh: Barclays
   Bank PLC, acting through its Investment Bank

   Financial advisor in relation to Masscash Cash and Carry stores: The Standard
   Bank of South Africa Limited

   Legal advisor in relation to Cambridge Food, Rhino and Massfresh: Edward Nathan
   Sonnenbergs Incorporated

   Legal advisor in relation to Masscash Cash and Carry stores: CMS RM Partners
   Inc. and Edward Nathan Sonnenbergs Incorporated

   Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd

Date: 20-08-2021 03:30:00
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