SPAR de-merger gains traction
Conglomerate Innscor Africa Limited has begun formal talks for the acquisition of the Western Region SPAR franchise from tycoon, Ray Kaukonde, himself a major shareholder in the cash-rich retail and manufacturing concern.The move comes hard on the heels of a restructuring of Innscor’s grocery division, SPAR, which is expected to pave the way for a possible de-merger and separate listing on the domestic bourse.
Sources said as part of the deal, Kaukonde would increase his interest in Innscor.
It is expected that an annual general meeting of shareholders will discuss the proposals by Innscor.
A highly placed source said to get a listing, SPAR would need to have at least 24 retail outlets of its own. Most SPAR outlets are owned by individuals.
This means the group, which has only four SPAR retail outlets, would have to buy additional outlets.
Already, talks with Kaukonde include the purchase of his two retail outlets in Harare operating under the SPAR franchise.
Kaukonde owns two state-of-the-art SPAR supermarket outlets in Harare — Joina SPAR and Borrowdale Brooke SPAR — both of which fall under the Eastern Region Spar Distribution Centre. Kaukonde’s other retail outlets include Marondera Wholesalers and Ronolf Wholesalers in Mutoko. All are held through Scotia Holdings, which has vast interests in automotive dealership and servicing, farming, security and steel.
SPAR finance director, Tineyi Mandengu, confirmed the talks were in progress but refused to give details.
“It’s true, Innscor Africa Limited (wants to acquire) the Spar Western Region franchise from Kaukonde but for more details get in touch with our group corporate affairs executive, Musi (Musekiwa) Khumbula,” said Mandengu last week.
Khumbula is the corporate affairs executive for Innscor. He could not be immediately contacted for comment.
SPAR has two regional franchise holders in Zimbabwe, with Innscor controlling the SPAR Eastern Region Distribution Centre (Eastern Guild) and Kaukonde controlling the Western Region.
The Eastern Region was formed in 2001, as a partnership between Innscor Africa Limited and SPAR South Africa.
Kaukonde took over control of the Western Region Spar Distribution Centre (Western Guild) in 2011 through his investment vehicle, Scotia Holdings, from ZSE-listed starafricacorporation limited, which held the Spar licence through Advance Wholesalers.
Advance Wholesalers held the Spar Zimbabwe license jointly with Spar Harare (Private) Limited, a unit controlled by Innscor Africa Limited, a fast moving consumer goods integrated chain with operations both in Zimbabwe and the region.
The Financial Gazette’s Companies and Markets (C&M) first reported on the planned de-merger of SPAR from Innscor last year soon after the group had declared that it would splurge its vast cash holdings towards expansion.
Early this month, C&M reported that a restructuring, the first phase of a possible demerger and listing, had been completed.
The company has amalgamated SPAR’s corporate store retail operations and the SPAR Distribution Centre in Harare.
In the process, Andrew Divaris was appointed as the new chief executive officer of the reconfigured SPAR, taking over from Evan Christophides, who had been managing director for SPAR Zimbabwe, Zambia and Malawi since 2005.
Divaris had been the managing director of SPAR Zimbabwe Corporate store retail division.
Innscor has been planning to unbundle at least one unit under a long-proposed restructuring exercise that saw the unbundling of the crocodile business, Niloticus, which listed on the ZSE at the end 2011 as Padenga Holdings Limited.
Innscor board chairman, David Morgan, has spelt out the ambitious project to shareholders, suggesting the de-merger could go beyond the crocodile business.
Since its listing in 1998, Innscor Africa Limited had “continually diversified into businesses which were able to fuel its growth in an economy which suffered from the effects of massive hyperinflation”, Morgan has said.
“This has led the group to having a significant number of differing businesses in its portfolio. Given the dramatic change to the macroeconomic environment, the board feels that it is now the time for certain of its businesses to be restructured in order to give those businesses the specific focus and drive that they now require and which will result in sustainable long-term business models being built for each business,” said Morgan.
C&M has previously revealed that Innscor executives and directors were seriously contemplating hiving off the SPAR division for a separate listing on the domestic bourse.
The group was said to be considering consolidating the SPAR franchise first before the possible listing.