Pick n Pay Stores Ltd., South Africa’s second-largest food retailer, may increase its stake in Zimbabwe’s TM Supermarkets to 49 percent from 25 percent as the country’s economy rebounds from a decade-long recession.
“There are negotiations underway,” TM company secretary Andrew Lane Mitchell said in a telephone interview from Zimbabwe’s capital, Harare, today. “The negotiations involve a debt-for-equity arrangement” to raise money to recapitalize the grocery chain.
TM Supermarkets, majority owned by Meikles Africa Ltd., is Zimbabwe’s biggest supermarket retailer with 50 outlets across the southern African nation. The company controls about 25 percent of the food and grocery market, according to its website. Pick n Pay spokeswomanTamra Veley wasn’t immediately able to comment on the talks.
Zimbabwe is rebuilding its economy after a recession that followed a drought and PresidentRobert Mugabe’s seizure of white-owned commercial farms for redistribution to blacks deprived of land under colonial rule. The state-controlled Herald in Zimbabwe today reported that TM might raise $21 million through the Pick n Pay transaction. Lane Mitchell declined to comment on how much the deal might be worth.
Meikles Ltd. said on Aug. 26 that net income declined 44 percent in the six months through June, even as revenue and sales more than doubled to $144.3 million.
Drawn-out Demerger
Meikles Africa is involved in a drawn-out demerger from Kingdom Meikles Africa Ltd. Meikles will hold an extraordinary general meeting on Sept. 13 to discuss how it can separate itself from Kingdom, a Zimbabwean banking and stock broking company.
Meikles Africa also owns clothing and drug stores, hotels and tea estates.
TM competes mainly with OK Zimbabwe Ltd., Bon Marche Supermarkets, Spar and Town and Country Stores (Private) Ltd.
To contact the reporter on this story: Brian Latham in Durban at blatham@bloomberg.net.
