Pepkor Holdings Ltd., Africa’s largest clothing retailer, is exploring a potential takeover of South African rival Edgars, according to people familiar with the matter.
The people involved said the owner of chains that include Pep, Ackermans, and Tekkie Town is thinking of spending up to 2.4 billion rand (US $ 126 million) for the 94-year-old brand. Retailability Pty Ltd. purchased the brand three years ago when it was put out of business rescue. Talks might yet break down, they said, and a different buyer might show up.
According to insiders who requested anonymity since the information is confidential, a merger may provide Pepkor an extra 131 locations with an emphasis on women’s apparel and cosmetics—areas in which Pepkor is seeking to grow.
Pepkor Chief Executive Officer Pieter Erasmus last week said that while the discount retailer is “focused on organic growth,” it also wants to sell more adult clothing and would consider doing that through an acquisition “at the right price.”
Pepkor declined to comment on the possible purchase of Edgars.
“Private equity is always open to opportunities, but there is no deal to sell Retailability or Edgars at present,” said Retailability CEO Norman Drieselmann in response to questions.
Pepkor is growing in Brazil as well. The Cape Town-based business made its first foray into South America last year when it acquired Grupo Avenida SA for less than 3.2 billion rand. As it repositions that operation towards the cheap category, it is now boosting its investments in the region. According to Erasmus, it will open 50 Avenida stores annually, which is twice as many as originally anticipated.
