DGAP-News: Steinhoff International N.V.

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STEINHOFF INTERNATIONAL HOLDINGS N.V. ("Steinhoff" or the "Company") - UPDATE ON THE PROPOSED LISTING OF STEINHOFF'S AFRICAN RETAIL ASSETS ON THE JSE LIMITED AND OPTIONS TO ACQUIRE INTERESTS IN SHOPRITE HOLDINGS LIMITED

1. Introduction

Stellenbosch, 4 August 2017 - Shareholders of Steinhoff are referred to the announcement released on 17 May 2017 ("the Initial Announcement"), in which the Company announced that it had initiated steps to list its African retail businesses on the main board of the JSE Limited (the "JSE") (the "Listing"). This announcement serves as an update on the progress of the Listing and other related matters.

2. The Listing of Steinhoff Africa Retail Limited

The listing process is progressing well and it is anticipated that it will complete by the end of September, subject to market conditions. A single holding company, Steinhoff Africa Retail Limited ("STAR"), has been established and, with effect from 1 July 2017, owns the African retail assets to be listed.

The African retail brands included in the Listing will comprise Pep in South Africa and the rest of Africa, Ackermans, Speciality division (comprising Dunns, John Craig, Refinery and Shoe City), JD Group (comprising Russells, Bradlows, Rochester, Sleepmasters, Incredible Connection and Hi-Fi Corporation), Steinbuild (comprising Buco, Timbercity, Hardware Warehouse and The Tile House), Poco South Africa and Tekkie Town (the "African Assets"). These retail brands are highly recognisable, benefit from one of the biggest retail store footprints on the African continent and have an impressive growth track-record, both in South Africa and the rest of Africa. After careful consideration, the board of Steinhoff has decided to exclude the Unitrans Automotive business from the Listing due to its different characteristics and growth drivers. The Unitrans Automotive business will be retained by Steinhoff.

STAR will remain a subsidiary of Steinhoff, one of the largest global discount retailers, and hence STAR will continue to benefit from the group sourcing, scale advantages, shared best practices and strategic direction, allowing STAR to effectively compete with both domestic and international retailers in Africa.

The Listing will be accompanied by a capital raising in order to establish the public shareholding spread and liquidity required by the JSE. The net proceeds of the capital raise will be distributed to Steinhoff.

Given the size and scale of the African Assets, and STAR's anticipated market capitalisation, STAR is likely to be included in the JSE Top 40 Index and other relevant emerging market indices, such as the MSCI Emerging Market Index.

3. STAR Management

Each of STAR's businesses will continue to be managed on a decentralised basis, under the leadership of their existing experienced and proven management teams.

Similarly Steinhoff's management board (consisting of Markus Jooste Chief Executive Officer ("CEO"), Danie van der Merwe Chief Operating Officer ("COO")) and Ben la Grange Chief Financial Officer ("CFO")) manages the decentralized global business in geographical clusters with Ben having been intimately involved in the African region and served on all divisional boards of STAR.

Accordingly, given his extensive involvement in STAR, Ben la Grange will be appointed as CEO of STAR. He will also retain his role as CFO of Steinhoff, but will delegate several of his current responsibilities in Steinhoff within the wider Steinhoff group. Riaan Hanekom, the Pepkor CFO, will be appointed as CFO of STAR. The experienced executive committee and non-executive board members will be led by Jayendra Naidoo as Chairman. Further details will be contained in the pre-listing statement of STAR ("PLS"). Pieter Erasmus (current CEO of the Pepkor Group) will join Steinhoff International NV to strengthen the global retail management team and will continue to support the STAR board and management team in this capacity.

The executive committee will consist of the following additional members: Leon Lourens (COO Retail Operations), Jaap Hamman (Pep South Africa divisional CEO), Charles Cronje (Ackermans CEO), Garth Napier (Pep Africa divisional CEO), Peter Griffiths (JD Group CEO), Eugene Beneke (Steinbuild CEO), Bernard Mostert (Speciality CEO) and Braam van Huyssteen (Property Committee Chairperson).

4. STAR Vision

STAR will continue to focus on being the preferred and most convenient destination for the African consumer, by providing everyday essential products at affordable prices.

In furthering this vision, STAR management, supported by Steinhoff, remain of the opinion that a strategic investment in a leading African food and grocery retailer should support its ability to further enhance its relevance to the growing African consumer base, and better protect its ability to compete against international retailers. In this regard, Steinhoff and STAR have secured options which, if exercised will result in STAR acquiring a strategic investment in Shoprite Holdings Limited ("Shoprite"), one of Africa's leading food and grocery retailers with a track record of successful growth and expansion in South Africa and across the continent.

5. The Shoprite Call Options

Steinhoff and STAR have entered into call option agreements with the Public Investment Corporation SOC Limited (the "PIC"), Lancaster Group Proprietary Limited ("Lancaster"), Titan Premier Investments Proprietary Limited ("Titan") (a company ultimately controlled by a family trust of Dr. Christo Wiese, the Chairman of Steinhoff) and one of its subsidiaries in terms of which STAR could acquire economic and voting interests in Thibault Square Financial Services (Pty) Ltd ("Thibault") and Shoprite (the "Call Options"). After implementation of the Call Options, STAR will hold approximately 22.7% of the economic interest and 50% of the voting rights in Shoprite.

STAR will, subject to the terms and conditions of the Call Options, exercise the Call Options following the implementation of the Listing. It should be noted that Steinhoff will continue with the Listing regardless of whether the Call Options are implemented, and Shoprite will in any event continue to maintain its separate listing on the JSE after the implementation of the Call Options.

The consideration payable for the exercise of the Call Options has been determined based on, inter alia, a share price of R215 per share for the approximately 128.2 million underlying Shoprite ordinary shares, an amount of R4.0 billion attributable to the deferred voting shares and an additional c. R4.0 billion for cash and cash equivalents held by Thibault. STAR will settle the consideration payable by the issuance of a fixed number of ordinary shares in STAR (representing a c.33.6% interest in the ordinary share capital of STAR after implementation of the Listing and the Call Options). The implementation of the Call Options remains subject to certain conditions precedent including regulatory approvals such as Competition Authorities' approval.

The exercise and implementation of the Call Options will not require STAR to extend a mandatory offer to the remaining Shoprite shareholders in terms of the South African Companies Act, No 71 of 2008 ("Act")and the Takeover Regulations as defined in the Act.

Full details of the Call Options will be included in the PLS.

5.1. Management commentary on the strategic investment

Pieter Engelbrecht, the Shoprite CEO, commented: "Shoprite management and all of its shareholders have, since its listing, been accustomed to a supportive controlling shareholder structure. We are excited that this structure and support will in future rest within another successful African based retailer that shares our passion and growth objectives. While there is significant potential for the underlying operating assets to work closely together, Shoprite's management and operations will continue to operate independently to drive its own focused strategic vision to create value for all shareholders."

Ben La Grange, the CEO of STAR, commented:" My management team and I are excited about the opportunities and focus that the new structure and independent JSE listing will provide to the STAR group. Furthermore, the proposed investment in Shoprite will strengthen STAR's ability to offer a unique value proposition to all of its stakeholders. The group's diversified African multi-format discount retail brands will operate across various stable and growing sectors that are highly cash generative, including fast moving consumer goods and now food. Both Shoprite and STAR will have a credible shareholder of reference that will support the STAR group's growth ambitions. There is significant potential for the underlying operating assets to work closely together both in current operations and in expanding into new regions."

6. Renewal of Cautionary Announcement

Shareholders are advised to continue to exercise caution when dealing in the Company's shares until a further announcement is made.

4 August 2017

Transaction and Corporate sponsor to Steinhoff and STAR

PSG Capital (Pty) Ltd

Legal Advisers to Steinhoff

Cliffe Dekker Hofmeyr Incorporated

Linklaters LLP

Girard Hayward Inc

Important Notice

The information contained in this announcement is restricted and not for release, publication or distribution, directly or indirectly, in whole or in part in, into or from the United States of America (including its territories and possessions, any state of the United States of America and the District of Columbia, collectively the "United States"), Australia, Canada, Japan or any other jurisdiction in respect of which the release, publication or distribution, directly or indirectly, of this announcement would constitute a violation of the relevant laws of such jurisdiction.

The securities mentioned herein have not been and will not be registered under the United States Securities Act of 1933 (the "Securities Act") or the securities laws of any other jurisdiction, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act or an available exemption from, or except in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any other jurisdiction. There will be no public offering of securities in the United States, Canada, Australia and Japan.

In South Africa, the offer of shares in STAR as part of the capital raising will be effected by way of a private placement and as such will not constitute an "offer to the public" as defined in the Companies Act. Investors will accordingly only be permitted to apply for shares if the applicant is a person who or which falls within one of the specified categories of persons listed in section 96(1)(a) of the Companies Act or, in accordance with s96(1)(b) of the Companies Act, if the application is for a minimum total acquisition cost, per single addressee acting as principal, of greater than or equal to ZAR1 000 000.

Certain forward-looking statements

This announcement contains certain forward-looking statements with respect to certain of the Company's, STAR's and Shoprite's current expectations and projections about future events. These statements, which sometimes use words such as "will", "aim", "anticipate", "believe", "envisage". "intend", "plan", "estimate", "expect" or, in each case, their negative and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance express or implied by the forward-looking statement. Forward-looking statements speak only as of the date they are made. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, neither the Company, STAR nor Shoprite assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

Language: English
Company: Steinhoff International Holdings N.V.
Herengracht 466, 1017 CA Amsterdam, Netherlands
Phone: +27218080700
Fax: +27218080800
E-mail: investors@steinhoffinternational.com
Internet: www.steinhoffinternational.com
ISIN: NL0011375019
WKN: A14XB9
Indices: MDAX

Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange