<\/p>\n
Pepkor\u2019s deal to merge its fintech arm with a rival business has upset some directors and investors because shareholders were not allowed to vote on a transaction that marks a major shift in strategy for Africa\u2019s biggest clothing retailer.<\/p>\n
Some directors voted against the decision by Africa\u2019s biggest retailer to combine its Flash arm with Shop2Shop in July to create a company valued at about R21 billion ($1.3 billion), according to a person familiar with the situation who didn\u2019t want to be named because the board vote isn\u2019t public.<\/p>\n
The directors objected to the lack of investor involvement while a top 30 investor, Aeon Investment Management, said shareholders should have voted on a deal where Pepkor Chief Executive Officer Pieter Erasmus also has a clear financial conflict of interest.<\/p>\n
Pepkor will own 57.1% of the enlarged fintech group, while Erasmus \u2014 who held a minority position in Shop2Shop \u2014 will own a 13.2% stake valued at about R2.8 billion based on the transaction\u2019s implied valuation. That could change before the deal is completed.<\/p>\n
Read:
As Shoprite CEO pay tops R117m, group wants to lock him in for six years
Pepkor shares slide on subdued earnings outlook<\/p>\n
The transaction doesn\u2019t require shareholder approval under Johannesburg Stock Exchange rules because it doesn\u2019t meet the exchange\u2019s threshold for a related-party transaction. Erasmus recused himself from deliberations and decisions concerning the merger, according to Pepkor.<\/p>\n
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Even so, seeking shareholders\u2019 views would have demonstrated better corporate governance, according to Asief Mohammed, chief executive officer of Aeon, which holds a 0.4% stake in Pepkor. Some directors voted against the transaction as they believed it should be put to shareholders, according to a person familiar with the situation that didn\u2019t want to be named because the board vote isn\u2019t public.<\/p>\n
\u201cIt would have gone down better had they done it,\u201d Mohammed said. \u201cSeeking shareholder approval would have been good governance.\u201d<\/p>\n
Mohammed said Pepkor could have offered a voluntary, non-binding shareholder resolution, letting investors express their views while leaving ultimate responsibility for the transaction with directors.<\/p>\n
\u201cYou could do that, and then you can maybe engage if necessary,\u201d he said.<\/p>\n
Pepkor says it obtained independent valuations of both businesses and a voluntary independent fair-and-reasonable opinion.<\/p>\n
Read:
Pepkor vs Mr Price: Why Pepkor is winning the investment case
Pepkor CEO on the other side of group\u2019s R21bn fintech deal<\/p>\n
The retailer declined to disclose how many individual directors had voted in favour of the deal, citing the confidentiality of board proceedings. Governance concerns over the deal come as Pepkor pushes deeper into financial services to find new sources of growth beyond its core discount-retail operations.<\/p>\n
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Cape Town-based Flash serves 170 000 informal traders, enabling them to sell virtual products such as airtime, mobile data and prepaid electricity. Shop2Shop is another payment platform for informal traders with more than 210 000 users.<\/p>\n
Pepkor has said combining Flash and Shop2Shop will expand its payments, lending and merchant-commerce businesses and broaden distribution for its planned digital bank. It plans to list the new firm \u2014 FintechCo \u2014 in the medium term.<\/p>\n
Read: Pepkor expands beyond retail with landmark fintech deal<\/p>\n
Pepkor\u2019s stock has dropped 31% this year, compared with a 25% decline on the eight-member FTSE\/JSE Retailers Index.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Pepkor #1.3bn #fintech #deal #faced #shareholder #vote #investor<\/p>\n","protected":false},"excerpt":{"rendered":"
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