South Africa’s second-largest grocery chain, SPAR (SPPJ.J), has announced the sale of its struggling Polish operations to local retailer Specjal for 185 million rand ($10 million). The move is part of SPAR’s ongoing strategy to streamline its European operations.
Details of the Transaction
SPAR will be required to recapitalize its Polish business, with an estimated cost of 2.7 billion rand. This recapitalization primarily involves settling the business’s funding debt. The sale and recapitalization efforts come as SPAR seeks to enhance its financial stability and focus on its core operations.
Key Points:
- Sale Price: 185 million rand ($10 million)
- Recapitalization Cost: 2.7 billion rand
- Impact on Shares: SPAR’s shares fell by 6.79% to 117 rand by 1220 GMT following the announcement.
Rationale Behind the Sale
SPAR’s decision to sell its Polish assets, which include approximately 200 retail stores, three distribution centers, and one production facility, reflects a strategic shift. The company had been reviewing its European operations and concluded that significant time and investment would be required for SPAR Poland to become profitable and add value to the group.
SPAR Group CEO Angelo Swartz commented on the sale, stating: “This also gives clarity to our dedicated employees in Poland, who now have the potential to expand the business under the ownership of Specjal, a company with the requisite resources, scale, and capacity to take these assets to the next level.”
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Impact and Future Outlook
The divestment from Poland aims to remove a loss-making segment from SPAR’s balance sheet, providing clarity and certainty for investors. SPAR operates in 11 countries, with its core South African business contributing approximately 60% of the group’s sales. The focus will remain on strengthening and expanding its presence in core markets while optimizing operations elsewhere.
The transaction marks a significant step in SPAR’s strategy to realign its international portfolio and enhance overall profitability.
Stay tuned for further updates on SPAR’s restructuring efforts and market impact.