Spar divests its operations in Poland

Shares of food retailer and franchisor Spar have been on a rollercoaster ride after the company's recent announcement to finalize its exit from Poland. The stock initially plunged 14 per cent but has since recovered, currently down 6 per cent. Spar revealed that it has inked a deal to sell its Polish operations to a local retailer for R185 million but will need to recapitalize the business at an estimated cost of R2.7 billion. Angelo Swartz, CEO of Spar Group, joined CNBC Africa to discuss the market reaction and the details of the deal. Swartz acknowledged the initial stock drop was disappointing but emphasized the long-term benefits of the transaction. Swartz highlighted several key points to explain why the deal is positive for Spar. He mentioned the importance of maintaining the Spar brand in Poland and minimizing job losses in the market. The acquisition by a local company with strong knowledge of the Polish market is seen as a strategic move to elevate Spar's presence in the region. Swartz also clarified the financial aspects of the deal, noting that the recapitalization cost includes repatriating existing debt and injecting additional funds into the business. When questioned about the sizable amount required for recapitalization, Swartz clarified that the figure includes existing debt and new capital infusion. He explained that the transaction's speed and the ability to conclude it swiftly were factors in Spar's decision-making process. Swartz also addressed potential adjustments to the deal value and outlined the remaining conditions, including regulatory approval. Looking ahead, Swartz expressed confidence that the transaction would be completed by year-end, providing certainty for Spar's exit from Poland. He refuted the notion of a 'fire sale,' highlighting the diligent process followed in reaching the agreement. Swartz discussed the upcoming focus on restoring operations and improving performance, particularly in South Africa. He outlined plans to address challenges faced in the past, including IT issues, and emphasized a renewed focus on core markets. Overall, despite the initial market reaction, Spar is optimistic about the future and the strategic importance of the Polish exit. Swartz's reassurance and strategic vision for the company have provided shareholders with a clearer outlook on Spar's path forward.