HomeNewsSouth Africa’s Absa, Edcon in $1,18 billion store card deal

South Africa’s Absa, Edcon in $1,18 billion store card deal

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JOHANNESBURG — Absa, the South African unit of Britain’s Barclays Plc, will pay R10 billion to buy the private label store card portfolio in South Africa of clothing and footwear retailer Edcon, the companies said yesterday.

The deal is expected to close in the second half of 2012.

“(The deal will) strengthen Absa Bank’s position in the unsecured retail credit sector, build a strategic relationship with one of South Africa’s leading retailers and allow Absa to make a greater range of financial services products available to existing and new customers,” the company said in a statement.

Edcon said the deal would boost credit sales, improve its balance sheet and allow the retailer to focus on and fund growth in its core business activities. The Edcon store card business operates primarily in South Africa, with smaller operations in Botswana, Namibia, Lesotho and Swaziland.
While Absa plans to also buy Edcon’s portfolios in the neighbouring countries, it is not a condition to the South African deal.

Under the deal, Absa will provide retail credit to Edcon customers, while Edcon will be responsible for all customer-facing activities.

Absa shares were up 0,73% at R152, outperforming a 0,08% rise in the Johanneburg Stock Exchange Top-40 index of blue chip companies.

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