SPAR South Africa has announced the sale of its Polish operations for 40 million Polish zloty (approximately R185 million) as a strategic move within its broader turnaround plan. However, the divestiture comes with the condition that SPAR will inject R2.7 billion into the business to recapitalize it.
The buyer is Specjal, a Polish retail company, which will take over the underperforming segment, thereby allowing SPAR to eliminate the loss-making unit from its financial statements. This transaction is aimed at enabling SPAR to reallocate its resources more effectively towards its primary market in South Africa and to explore new avenues for growth.
SPAR Group CEO Angelo Swartz commented on the deal, emphasizing its significance for the company and its Polish workforce. He expressed optimism that under Specjal’s ownership, which has the necessary resources and scale, the business will thrive and reach new heights.
The assets included in the sale comprise 200 retail outlets, three distribution centers, and one production facility in Poland.
Swartz expressed satisfaction with the timely structure of the sale and conveyed his eagerness to refocus on strengthening SPAR’s presence in Southern Africa, which is the core of the company’s operations. Despite SPAR’s international presence across 11 countries, the South African segment remains the largest, contributing around 60% of the group’s total sales.
The CEO also highlighted the transaction’s benefits for shareholders, providing financial certainty and presenting an opportunity for the Polish division and its employees, given Specjal’s reputable background in retail and wholesale.
The recapitalization of SPAR Poland, estimated at PLN 586 446 288 (R2.7 billion), will primarily involve settling the business’s funding debt. The final amount is subject to regulatory approval and may be adjusted to ensure the net asset value of the SPAR Poland Group is PLN0 at the effective date of the sale.
Swartz reflected on the closure of SPAR’s chapter in Poland, noting that the sale aligns with the company’s refocused strategic direction. He reiterated SPAR’s commitment to leveraging its strengths, enhancing efficiency, profitability, and operational excellence.
In addition to this divestiture, Bloomberg has reported that SPAR South Africa may be considering a bid for the financially troubled West Pack Lifestyle, which entered business rescue in June due to its inability to meet debt obligations. The potential acquisition would come as West Pack has faced cash flow issues amid rapid expansion.
SPAR, recognized as the second-largest grocery retailer by revenue in South Africa, is eyeing opportunities to diversify its business beyond the food sector and capture a greater share of the market. One potential avenue for this expansion could involve the acquisition of West Pack Lifestyle.
Sources familiar with the situation have indicated that any prospective buyer would need to assume the considerable debt that West Pack has accumulated.
In response to inquiries about such strategic moves, SPAR has maintained a stance of confidentiality on potential business discussions or reviews aimed at broadening their range of offerings and growing the company. SPAR has clarified that it is not currently engaged in talks with West Pack Lifestyle.
The company handling the business rescue proceedings for West Pack, Matuson & Associates, has reportedly received multiple binding offers for the business. Further information regarding the offers and the future of West Pack is anticipated to be disclosed later in the month.
