Steinhoff International Holdings Ltd., the South African retailer which last year agreed to buy Pepkor Holdings Pty Ltd. for $5.2 billion, said it would buy out fellow investors in furniture chain JD Group Ltd.
The company will offer 34 rand per share for the 13.22 percent stake it doesn’t already own, a deal valued at about 1.2 billion rand ($99 million), Johannesburg-based Steinhoff said in a statement on Tuesday. It will then seek to delist the unit. JD Group shares gained 17 percent to an 18-month high of 32.85 rand as of 1:36 p.m. in Johannesburg, valuing the company at 8.8 billion rand.
The deal will give Steinhoff greater flexibility in restructuring JD Group, cut the costs related to the furniture retailer’s Johannesburg listing in Johannesburg and will also simplify Steinhoff’s “corporate and operating structure,” the company said.
Steinhoff increased its stake in JD Group last year to shore up the unprofitable company’s finances amid a downturn in South African consumer spending. Retailers in Africa’s most industrialized economy have struggled due to unemployment of about 25 percent, strikes and high levels of personal debt.
Steinhoff plans to pay for the stake with existing cash and has been given irrevocable undertakings from shareholders that own more than half the remaining shares to vote in favor of the deal, the company said.