The estimated 180 billion rand ($14 billion) deal was the idea of retail magnate Christo Wiese, who owns 16 percent of Shoprite and 23 percent of Steinhoff, the owner of UK’s Poundland and U.S.-based Mattress Firm.

It had however raised concerns among minority shareholders at Shoprite who feared they were getting a raw deal.

In a joint statement, the two firms said “the fact that the relevant parties could not reach an agreement in respect of the share exchange resulted in the negotiations being terminated.”

Steinhoff’s shares in Johannesburg rose more than 7 percent, hitting their highest in four weeks, while Shoprite’s stock jumped to a two-month high, up more than 6 percent.

“For a lot of Steinhoff shareholders today they will be smiling because at least they keep their positions in the same way they found them, that’s a positive for them,” said trader at Global Trader Paul Chakaduka.

“For Shoprite there has been this major overhang around this acquisition for a very long time and I think it will free up any uncertainties.”

The deal would have given Steinhoff, dubbed Africa’s IKEA and which vies with the Swedish firm for global market share, a major interest in Shoprite, a 110 billion rand company operating in countries including South Africa, Nigeria and Angola.

It would have allowed Steinhoff to hive off its struggling African assets — made up mainly of clothing, shoe and textile company Pepkor — into a new, separately listed merged entity called Retail Africa and possibly prompt a higher investor rating for its fast-growing European businesses.

At the heart of Shoprite investors’ complaints were a lack of obvious cost savings from overlaps between Pepkor’s operations and grocery retailer Shoprite, and exchanging a stock with bigger potential for what they called inferior businesses. ($1 = 13.1392 rand)

(Reporting by Nqobile Dludla and TJ Strydom; Writing by James Macharia; Editing by Keith Weir)