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Retail conglomerate Steinhoff International has entered into talks with South African-based supermarket group Shoprite Holding in bid to create ‘the retail champion of Africa’.

The two companies officially stated in December 2016 that negotiations to merge its respective African retail businesses were underway, with the objective to create a ‘formidable entity’ called Retail Africa.

Shareholders of both companies, namely Public Investment Corporation SOC Limited (PIC) and Titan Premier Investments Proprietary Limited (Titan), a company ultimately controlled by a family trust of Dr. Christo Wiese, has backed the proposal and initiated early discussions between the Steinhoff and Shoprite boards.

According to the proposal, the new venture, Retail Africa, would generate annual revenues of around ZAR200bn (£12bn), with an EBITDA to be worth around ZAR15bn (£900m).

Under the terms of the deal, Shoprite would acquire Steinhoff’s African retail operations, consisting of Pepkor Africa, JD Group, Steinbuild and Tekkie Town, with Steinhoff to receive a significant equity interest in Shoprite.

Steinhoff, which owns UK brands Benson for Beds and Harveys, has also entered into an in principle agreement with PIC and Titan to acquire its interests in Shoprite in the form of a Steinhoff share-for-Shoprite share exchange, which ‘may ultimately result in Steinhoff acquiring control of Retail Africa’, the proposal stated.

The move behind the potential merger would see Retail Africa position itself as the leading multi-format discount retailer across Africa, employing 186,000 staff.

The companies said: “Retail Africa, locally bred, will have the required size and scale to compete with any other international retailer.”

The negotiations are still ongoing and if the deal is completed, it would create a retail empire of more than 9,000 stores across every continent except Asia, and would further add to Steinhoff’s recent spree of acquisitions, which include UK discount chain Poundland and US retailer Mattress Firm Holding for £597m and $2.4bn respectively.