Steinhoff sells stake in e-retailer to supermarket giant at a loss

Cape Town - International supermarket chain Carrefour announced last week that it will acquire a stake in e-retailer Showroomprivé from European home furnishings retail chain Conforama, a subsidiary of embattled global retail group Steinhoff [JSE:SNH].

This comes less than a year after Steinhoff, via Conforama - one of its largest European subsidiaries - bought a 17% stake in the digital retailer. 

Carrefour, in a statement on its website, said that Showroomprivé is Europe's second-largest online private sales company. As part of the agreement, Carrefour will acquire 17% of the share capital of Showroomprivé from Conforama. 

"[This partnership] also allows Carrefour to enter the online private sales market and strengthen its offering," said Carrefour CEO Alexandre Bompard in the statement. "I am convinced of the quality of Showroomprivé's management and the strong potential resulting from the operational cooperation between our two groups."

Steinhoff takes loss 

Steinhoff had bought the 17% stake in Showroomprivé in early May for €157.5m, at €27 per share. Carrefour's investment in Showroomprivé, meanwhile, will take the form of an off-market acquisition of the block of shares owned by Conforama at €13.5 per share, for a total amount of about €79m.

This means that Steinhoff, via its subsidiary Conforama, will be selling its stake for about half of what it was paid for last year. 

The Stellenbosch-headquartered retailer said in an investor update in early January that "significant near-term liquidity [was] still required in certain of the business units". According to Bloomberg, JPMorgan Chase & Co and Goldman Sachs Group have both recently taken losses linked to the group. 

Steinhoff's share price has plunged by over 80% since early December, when its former CEO Markus Jooste abruptly quit amid an accounting scandal and it announced that PwC had been retained to investigate its books. 

On Monday January 15 at 14:00, Steinhoff shares were changing hands at R5.88 a share.   

The fashion and household goods retailer has delayed the publication of its 2017 audited financial statements, and has said its 2016 statements also need to be restated. 

Upon completion of the transaction, Carrefour will replace Conforama in the current shareholders’ agreement between the founders of Showroomprivé and Conforama. The main terms will be the same as the existing one between the founders and Conforama/Steinhoff.

The founders will retain 27.17% of the capital and 40.42% of the voting rights. Carrefour will hold 16.86% of the capital and 13.67% of the voting rights.

The transaction is subject to obtaining a waiver from the Autorité des Marchés Financiers (the French authority of financial markets), exempting Carrefour from the obligation of launching a public offer.

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