Africa’s biggest retailer, Shoprite Holdings had on Monday, August 3, said it was considering divesting its majority stake in its Nigerian subsidiary, Retail Supermarkets Nigeria Limited.
According to a trading update filed at the Johannesburg Stock Exchange (JSE), the company has set the liquidation of its majority share in motion.
“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,” the company said.
Although after the report of Shoprite exiting Nigeria went viral, the retail giant released rebuttal, stressing that the claims were untrue. The company said it only opened investment opportunity to Nigerians.
“We only gave this opportunity to Nigeria investors to come in and also help drive our expansion plan in Nigeria. So we are not leaving”, the Country Director for Chastex Consult, Ini Archibong, spoke for Shoprite.
In a new report by TheCable, Shoprite is technically exiting Nigeria by selling off all or its major stake but the investment deal involves the company retaining the management of its chain of operations, brand name, trademarks, and supply chain.
Three companies are said to be in a tight race to acquire the larger stake of Shoprite.
The report said the preferred investor out of the three entities is Persianas Nigeria Limited, a property development company, owned by Tayo Amusan.
Some of the properties that house Shoprite outlets in Nigeria are said to be owned by Amusan, including The Palms in Lagos. He also owns malls in Enugu, Kwara, Ota and Ibadan – all in Nigeria.
The astute businessman also heads the board of other Nigerian companies like African Paints Nigeria Limited, and Resourcery Limited.
The two other companies Amusan is contending with reportedly have links with foreign firms. One is 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.
According to an internal memo dated July 31 and seen by TheCable, Shoprite General Manager, Carl Erickson, told 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.”
The retailer had said it was reviewing its businesses in Africa as it struggles to sustain profitability. This week, the company announced it would be closing its second outlet in Kenya out of the four in the country.
The company reported a sharp decline in sales of 6.3 percent in the 2020 fiscal year in Nigeria.
Shoprite stores are in 14 African countries, with 25 outlets in Nigeria alone. It has operated in the country for nearly 15 years.