Spar to get rid of Polish business – at a big cost

Spar has taken the next step in its turnaround plan by concluding the sale agreement for the disposal of Spar Poland to Polish retailer Specjal. 

However, Spar will first need to pump billions into the business to settle its debts before the sale can be concluded.

Spar announced today that the deal, valued at 40 million Polish zloty, or R185 million, marks a significant milestone for the retailer.

The company said this would enable Spar to streamline its operations and focus on core growth opportunities at its home base in South Africa.

“Spar Group’s strategic turnaround plans continue to gather pace and open the door to core growth opportunities with the conclusion of a sale agreement for the disposal of Spar Poland to local Polish retailer Specjal,” the company said.

Spar explained that Specjal is a popular local Polish retailer and wholesaler established in 1990 with a reputation for growth and innovation.

“The widely anticipated deal provides certainty for investors, removes loss-making business from the balance sheet and allows Spar to focus resources into its core business in South Africa as well as take advantage of new growth opportunities,” Spar CEO Angel Swartz said.

“This also gives clarity to our dedicated employees in Poland, who now have the potential to expand the business under the ownership of Specjal, a company with the requisite resources, scale, and capacity to take these assets to the next level.”

SPAR’s Polish assets comprise approximately 200 retail stores, 3 distribution centres and 1 production facility.

“We are pleased to have been able to structure this sale in the agreed timeframe and are ready to take our own business to the next level by focusing on our Southern African strengths as the heart of our business,” Swartz said.

SPAR operates in 11 countries, but its core South African business accounts for about 60% of group sales.

“This sale brings certainty for shareholders from a funding perspective,” Swartz said. 

“It creates an opportunity for SPAR in Poland and our people employed there, as the purchaser is a well-known retailer and wholesaler with a strong track record.” 

“Specjal wants to scale the SPAR assets in Poland and has the resources to do so.”

The sale of Spar Poland is for R185 million, but Spar will need to recapitalise the business, which is estimated to cost R2.7 billion, the majority of which will be achieved by Spar settling the business’s funding debt. 

The agreement is subject to final regulatory approvals, and the recapitalisation will be increased or decreased, depending on the circumstances, to obtain a net asset value for Spar Poland Group equal to zero Polish zloty at the effective date.

“Our journey into Poland is coming to an end. However, this deal further solidifies our renewed strategic intent,” Swartz said. 

“Our continued focus is on harnessing our strengths, driving efficiencies, profitability and excellence.”