BUSINESS MAVERICK: Book Extract: Christo Wiese – Risk and Riches

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BUSINESS MAVERICK: Book Extract: Christo Wiese – Risk and Riches By TJ Strydom

Only a few days before the shares were issued, the news agency Reuters interviewed Christo Wiese. Two experienced journalists quizzed him on the chances of a Steinhoff-Shoprite merger. Giving nothing away, he said that to combine the two companies would be “a natural development”.People know that I am 75 years old, and I, fortunately, have a son who is in business with me, but as a family, we are continually looking at consolidating our business interests,” he added.

What is more, its market share was growing as low-income consumers rushed to Shoprite to get more bang for their buck in an economy with high unemployment, glaring poverty and weak prospects. Those with more to spend increasingly shopped at Checkers as it made a play for the lucrative business that Woolworths had developed as an upmarket grocer.

By the end of 2016, Basson was 70 years old. He and Wiese regularly fielded questions about when they intended to retire or what sort of succession planning Shoprite was doing for the day that Basson would no longer be in charge. “Whitey suffers from an ailment that I think I also suffer from, to some extent. A belief that we will live forever,” said Wiese.

Minority shareholders were not at all on board. Investors prefer to know what they are investing in. Shoes, celery, spades and sofas wouldn’t necessarily work in the same company. Different factors could influence consumer sentiment for the various goods. Asset managers with Shoprite shares also complained that the announcements did not explain the planned transaction in enough detail.

Maybe not even the Pope would have been able to resolve the conflict then raging between the two factions of the ruling party in South Africa. President Zuma and his loudest supporters seemed to be at war with finance minister Gordhan and the national treasury. “That is a very, very unfortunate impression. Very unfortunate. But we keep on saying that. And we say it openly and very robustly,” said Wiese, while many business leaders tiptoed around the issue.

No matter what the country’s status, Shoprite remained a bluechip stock. But by this time it was clear that another Steinhoff deal was brewing. Basson voted with his feet. At the same time, Steinhoff announced that it would acquire, through its subsidiary STAR, as much as 23% of Shoprite, buying it from the Wiese family, the PIC and the empowerment partner Lancaster. But more importantly, the company would buy a block of shares from Wiese that carried more voting rights

But other events conspired to disrupt this silent takeover manoeuvre. Just a few days before STAR’s listing on the JSE, Jooste and Steinhoff’s chief financial officer, Ben la Grange, received an email from Deloitte. As auditors, they had been given information about the German tax investigation and certain negative media articles about Steinhoff had also come to their attention, the email read.

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