Massmart sells most food assets to Shoprite for R1.36bn

To sell Cambridge, Rhino, massfresh, cash & carry.
Massmart to focus on businesses with high returns. Image: Bloomberg

Massmart is selling its non-core food assets to rival Shoprite Holdings for R1.36 billion to focus on businesses with high returns, the South African retailer controlled by Walmart said on Friday.

Massmart is in the middle of a turnaround that has now moved beyond shutting underperforming stores and replacing fresh and frozen food at its Game chain with clothing. After the deal, it will mostly sell fresh food through its wholesale Makro chain.

Read: Will Walmart ditch Massmart as things go from bad to worse?

“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 Chief Executive Mitch Slape said.

Under the deal, Cambridge Food, Rhino and Massfresh, which is made up of The Fruitspot and a meat processing facility, as well as 12 Cash & Carry stores, will be transferred to Shoprite Checkers, Massmart said.

It said proceeds from the deal would be used to pay down drawn bank facilities and for investments in e-commerce and also in general merchandise, do-it-yourself and wholesale food and liquor, Massmart’s core businesses.

The transaction, consisting of 71 food stores, 43 liquor shops and a meat processing facility, is expected to close early in the first quarter of 2022.

For Shoprite, a leader in high-volume and discount retail, the deal will give it a bigger slice of the 595 billion rand food and grocery retail market, of which less affluent shoppers make up the overall market.

“We believe we can profitably run these operations,” Shoprite group chief executive Pieter Engelbrecht said in a separate statement.

He said the deal also gave Shoprite, South Africa’s biggest retailer by market capitalisation, immediate access to opportunities that were on its medium-term list.

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Dumping Food in Game for clothing?

Really? Someone should buy them a book about “how to stick to your core business and stay focused”

I can’t imagine buying bread, milk yogurt and Apples in an Apple store

Well Apples maybe, but definitely not pears

Agree, who wants to buy a lawnmower with ther bread and milk? Game aint the only ones who take this scattergun approach – CNA have zero stock for anyone trying to complete a school project but hey you can get a new cell phone and a marshmallow chocolate.

Hilarious, but oh, so true!

And so the great Wallmart onslaught on South Africa comes to an end. Now it is a matter of just staying afloat.

Where are the days where one could walk into Makro and blindly buy an item and know the price is good, if not unbeatable. That is, provided that you have a Makro card. These days you have to shop around, Makro is by far not the cheapest kid on the block anymore. No more blind brand loyalty from me since Wallmart took over.

Yankee investors fleeing the failed state.
Imagine the discussion at Walmart Head Office after the KZN looting spree-what is the upside of staying in the failed state-lets cut our loses and FLEE

Well, at least the retreat of US retail out of South Africa is more orderly and structured than the retreat to the US armed forces out of Afghanistan. Nobody is begging them to stay either, and nobody hangs on the shopping trolleys as they climbed on the airplane in Afghanistan. Strange people, those Afghans.

In contrast with US hegemony, in the free market, the party that adds the most value and serves the consumer best will eventually control the territory and possess the assets. You don’t need to convince and coerce them with firepower and Reaper drones, the consumer has the freedom to decide where he wants to push his shopping trolley and spend his money. The consumer shows his gratitude by rewarding the entrepreneur that serves him best. Consumers are the foot soldiers who invaded new territory on behalf of Shoprite. They funded the acquisition. They took the territory with their shopping trolleys, not tanks or armored personnel carriers.

The free market, without coercion from the government, and politicians with their vested interests, is the ultimate form of democracy. The market mechanism consists of people, independent individuals. When voters do not trust the market mechanism it implies that they do not trust their fellow man, or that they want to force their personal agenda and rule over their fellow man.

Every small restriction or interference by politicians in the free market is an infringement on individual freedom and liberty. People use their vote to enslave themselves in a slow process of encroaching socialism.

Reasonable analogy Sensei and, like Afghanistan, the US Walmart has recognised that SA is a wasteland full of savages as far as Walmart’s experience goes. Shoprite, maybe with Wiese’s different and more “flexible” “values”, understands Afrika better. Not for the faint hearted.

R1.36 billion for 114 stores. That equates to 12 million a store!! These stores turnover easily R600 million a month so that is two/three months sales, Shoprite will easily be netting 3/4% of that amount monthly. Great return for little input.

Shoprite either is lucky or knows how to negotiate and cease investment opportunities where they see potential returns. Remember, they purchased OK for R1 from South African Breweries (SAB) in 1997.

Let’s hope that the French can level the ‘high returns’ that Wall Mart wants to concentrate on.

Privatise the CCTV cameras at the Makro grocery section and double your profits….

ShopRite get the burnt assets as well. ?

End of comments.

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