Tekkie Town filed papers in the Western Cape High Court late on Thursday afternoon to have its R3.2 billion 2016 acquisition by Steinhoff cancelled.
Steinhoff acknowledged this via Sens on Thursday, saying that it had received “demands” from the Tekkie Town vendors of some €120 million (R1.75 billion).
Warren Erfmann, previously a non-executive director of Tekkie Town, said the founders and shareholders of Tekkie Town that sold to Steinhoff in 2016 want the transaction cancelled on the basis that what Steinhoff was representing at that time was false. “It’s fairly straightforward,” says Erfmann. “We believe we were misled by Steinhoff as the withdrawal of its financial statements have indicated, and we want the court to cancel the transaction and return the business to its original owners.”
In unwinding the transaction, complexity may arise from the fact that Steinhoff vended Tekkie Town into Steinhoff Africa Retail (Star) last year, which listed separately on the JSE.
Steinhoff purchased the entire shareholding of Tekkie Town for a consideration of R3.2 billion. Steinhoff used its own shares as consideration for 58% of the transaction. The majority of the 58% belonged to AJVH Holdings, an entity controlled by Braam van Huyssteen, the founder of Tekkie Town, and Bernard Mostert, the CEO of both Tekkie Town and Star’s Speciality Fashion and Footwear division. The balance of Tekkie Town was owned by private equity firm Actis, which sold for cash.
When contacted for his response, Van Huyssteen, who is still the chairman of the Speciality Fashion and Footwear business under Star, confirmed that he wanted to unwind the transaction. “We started this business in Mossel Bay in 1989 and brick-by-brick we built it up over the last few decades. People entrusted us to look after the business – our employees and our shareholders – and we were confident at the time that we did the Steinhoff deal that it would be the right home for us. But the last few months have proven this to be otherwise.”