Germany raids Steinhoff offices ahead of listing

A police car stands in front of the Deutsche Bank headquarters in Frankfurt, central Germany. (Alex Domanski, dapd/AP)
A police car stands in front of the Deutsche Bank headquarters in Frankfurt, central Germany. (Alex Domanski, dapd/AP)

Cape Town – South Africa's furniture retailer Steinhoff said German authorities searched its offices in November in connection with tax investigations, which comes ahead of its Frankfurt Stock Exchange (FSE) listing on 7 December.

The Westerstede offices of Steinhoff Europe Group Services GmbH (SEGS), a German subsidiary of Steinhoff International Holdings Limited (SIHL), were searched on November 26, 2015, it said in a JSE Sens statement on Friday.

Steinhoff said authorities are reviewing the balance sheet treatment of certain transactions involving transfers of participations and intangible assets among SEGS, additional subsidiaries and third parties pursuant to §331 HGB.

The investigation focuses on adherence to “an arms’ length” valuation and proper accounting in relation to Germany’s generally accepted accounting principles.

“SEGS is fully committed to support the authorities, and has begun to take immediate steps, in clarifying and resolving these matters,” it said.

Steinhoff said it believes the matter has been properly reflected in its group accounts.

Steinhoff said it announced the search because it felt it was “relevant in respect of its maiden listing” on the FSE. The retailer will maintain its listing on the Johannesburg Stock Exchange.

Steinhoff took a beating on the JSE, losing 6.63% to R77.50 by 10:35.

Bloomberg reports Steinhoff is listing on the German stock exchange to increase its exposure to investors on the European continent, where it owns the French retailer Conforama. It also has operations in the UK and Germany.

Steinhoff is also seeking to become one of the world’s biggest discount retailers following the purchase of Pepkor.

“The uncertainty will likely put a damper on Monday’s FSE trading,” Alec Abraham, an equities analyst at Sasfin Securities in Johannesburg, told Bloomberg by phone. “Longer term, Steinhoff’s share may still rise, based on its valuation versus its German peers.”


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