A major Mr Price shareholder, 36One Asset Management, is publicly slamming the retailer's plan to buy German chain NKD for roughly R9.6 billion. In a sharply critical letter, 36One co-founder Cy Jacobs questioned the deal's high price and strategic logic, warning it mirrors past failed overseas expansions by South African retailers. This disapproval triggered a significant drop in Mr Price's share price.
The acquisition would grant Mr Price control of NKD's approximately 2,200 discount stores across several European countries. Company leadership argues it aligns with their low-cost model and offers growth in a new market. Critics, however, highlight NKD's thinner profit margins and the challenging European economic climate. Jacobs specifically noted the purchase price represents a steep earnings multiple and pointed to troublesome precedents like Woolworths' costly David Jones acquisition.
The strong opposition from a key investor sets up a contentious shareholder vote. 36One has called for urgent talks to reconsider the transaction, with some voices even suggesting board accountability. Market analysts echo concerns about potential profit dilution and the operational risks of integrating a large foreign business, especially amid fierce competition from global online discounters.
The acquisition would grant Mr Price control of NKD's approximately 2,200 discount stores across several European countries. Company leadership argues it aligns with their low-cost model and offers growth in a new market. Critics, however, highlight NKD's thinner profit margins and the challenging European economic climate. Jacobs specifically noted the purchase price represents a steep earnings multiple and pointed to troublesome precedents like Woolworths' costly David Jones acquisition.
The strong opposition from a key investor sets up a contentious shareholder vote. 36One has called for urgent talks to reconsider the transaction, with some voices even suggesting board accountability. Market analysts echo concerns about potential profit dilution and the operational risks of integrating a large foreign business, especially amid fierce competition from global online discounters.
