Retail group Massmart announced that it would sell some of its food-focused retailers and cash and carry stores to Shoprite Checkers for R1.36 billion.
The transaction, which is subject to regulatory approvals, will see ownership of Cambridge Food, Rhino and Massfresh – comprising The Fruitspot and a meat processing facility, along with 12 cash and carry stores, transferred to Shoprite Checkers.
The company—which also owns Makro and Game—said it would use the financial proceeds from the transaction to pay down drawn bank facilities, invest in ecommerce, and also in merchandise areas in which Massmart is the market leader, such as general merchandise, DIY, and wholesale food and liquor.
The deal comes after announcements in Massmart’s operational update in February 2021 and its annual financial results presentation in March 2021, in which it disclosed it would reduce exposure to non-core operations whilst prioritising investment in high-returning trading assets.
The company expects the transaction will close early in the first quarter of 2022.
Commenting on the announcement, Massmart Group CEO Mitch Slape said the sale marks another step in the Group’s portfolio optimisation process and will, amongst other benefits, free up management time to enable increased focus on leveraging Massmart’s core merchandise and market strengths.
Massmart said the sale would be effected through a Section 197 process, which will mean that affected staff members will continue to be employed by Shoprite Checkers 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,” Slape stated.
“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.”