The Sunday Times reported that MTN South Africa and Telkom have held discussions regarding a possible merger.
A merger between the companies makes sense operationally, as it will create a telecoms powerhouse in South Africa with tremendous scale.
It will combine MTN’s strength in the mobile market and Telkom’s dominance in the fixed-line and fibre arena.
This scale will provide the companies with a competitive advantage in South Africa in both the fixed and mobile markets.
This, however, is the reason why such a merger will not be approved by the Competition Commission – unless strong political forces drive it.
MTN–Telkom plan not new
The plan to merge MTN SA and Telkom is not new. In 2015, MTN considered an acquisition of a majority stake in Telkom to challenge Vodacom’s dominance in South Africa.
At the time MTN reportedly held exploratory discussions about a possible offer for Telkom.
These discussions followed a planned network-sharing agreement between Telkom and MTN SA in 2014.
The plan was for MTN to take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network.
MTN said at the time it does not expect the deal to require regulatory approval, but it expects resistance from industry participants.
MTN was wrong. In 2015, the Competition Commission recommended that the Competition Tribunal not approve a bilateral roaming agreement between MTN and Telkom.
The Commission said the transaction would impact the structure of the mobile market in South Africa, and would “prevent or lessen” competition.
Bigger deal will be more difficult
If the Competition Commission would not approve bilateral roaming and outsourcing of the operation of Telkom’s radio access network to MTN SA, a bigger deal will nearly certainly be rejected.
However, if there is enough political will to make such a deal happen, approval may be easier to get.
The South African government is a controlling stakeholder in Telkom, and President Cyril Ramaphosa was MTN’s chairman for over a decade – from 2002 to 2013.
If such a move can help the two companies to become more profitable and avoid further job cuts at Telkom, it may receive a favourable reception among political decision makers.
MTN comments on discussions
MTN South Africa’s executive for corporate affairs Jacqui O’Sullivan told MyBroadband that they remain in talks with Telkom regarding its roaming agreement.
“Reports regarding further discussions between the two operators are conjecture and MTN chooses not to comment on market speculation,” she said.
Telkom was asked for feedback regarding the discussions, but the company did not respond to questions.
By Louisa Hallett for RetailLeader
Staples is acquiring HiTouch Business Services to enhance the customer experience when it comes to technology, product assortment and services capabilities.
Staples is following the lead of rival Office Depot in enhancing its business services.
Staples is acquiring HiTouch Business Services to enhance the customer experience when it comes to technology, product assortment and services capabilities.
“We think Staples can bring tremendous value to HiTouch Business Services in the form of more robust capabilities and the scale that comes with being the industry leader for workplace solutions,” says Sandy Douglas, CEO of Staples.
“The combination of HiTouch’s sales organization and the strength of Staples will allow us to give customers an even higher level of service. We will continue to look for strategic opportunities like this one where we feel we can help create better options for businesses in the marketplace.”
HiTouch Business Services is a company that provides everything a business needs to operate, according to their company description. They will be a part of the Staples Business Advantage delivery organization, as well as supplying an expanded assortment of products and up-to-date e-commerce tools. HiTouch’s marketplace will still serve as its own independent platform.
“For the past 15 years, HiTouch Business Services has served its customers with pride and we look forward to the next chapter with Staples,” says John Frisk, president and CEO of HiTouch Business Services.
“We will continue to support businesses as we always have, but now with enhanced solutions from a best-in-class service provider. Together, we can create a new business model which leverages the size of a company like Staples, with the local touch HiTouch is known for, to create a truly differentiated offering.”
Staples is the world’s largest office solutions provider to date and is headquartered near Boston, with 1 255 stores located across the U.S. and 304 located throughout Canada.
By Andy Braithwaite for OPI.net
France-based Groupe Hamelin has re-entered the Australian school and office supplies market by taking a controlling interest in the Bantex Group.
Bantex went into voluntary administration at the end of 2017 and has been operating under a deed of company arrangement (DOCA) since February after reaching an agreement with its creditors. Hamelin CEO Eric Joan confirmed to OPI that Bantex is no longer under DOCA as the deed fund has now been paid in full following the takeover by Hamelin.
“The company was restructured during the voluntary administration and is now healthy,” said Joan. “The business was run for years with a lack of working capital and too high a cost structure. These problems have now been solved and we are very excited by the opportunity.”
Bantex Australia has been rebranded as Hamelin Brands Pty and will continue to market the well-known Bantex and Quill products in the country. The business is being run by Managing Director Franck Troquay. He was formerly running Hamelin’s operations in Malaysia, but has now relocated to Australia.
Former Bantex Managing Director Michael Stathakis is remaining with the company as Business Development Officer. Commenting on this appointment, Joan disagreed with OPI’s suggestion that Stathakis’ move into this role might be viewed as a temporary one.
“Even independent, Michael has always been part of the Hamelin family and we have known each other for almost 18 years,” said the Hamelin CEO. “The bailout of Bantex by Hamelin is for him the opportunity of a new start. He will bring his energy and market knowledge to a venture where we will bring management, structure and product
innovation. We believe it is a recipe for great success for all of us and Michael is just as excited as we are.”
The acquisition marks a return to the Hamelin fold of Bantex Australia. It sold the company to Australian Office Wholesalers in 2001 as it focused on integrating the Elba and Bantex brands in Europe following their acquisition by Hamelin in 1999.
Hamelin returned to the Australian market when it acquired the Canson brand in 2007, but it sold this business to FILA in 2016. Joan said the group was now “back for good” in Australia as it focused on its core school and office products categories.
Terms of the Bantex Australia deal were not disclosed.
By Sarah Butler for The Guardian
Sainsbury’s planned £7.3bn takeover of Asda comes as the London-based supermarket continues to be outgunned by its three major rivals, according to the latest sales figures.
Sainsbury’s sales rose by just 0.2% in the 12 weeks to 22 April, its slowest pace of growth for more than a year.
Asda’s sales rose by 1.4% in the period, but the Leeds-based chain and Sainsbury’s both lost market share, according to the latest data from Kantar Worldpanel, while Tesco and Morrisons held steady thanks to their turnaround plans.
“It is very competitive out there for Sainsbury’s,” said Fraser McKevitt, the head of retail and consumer insight at Kantar Worldpanel. “Having had a difficult couple of years, Morrisons is now doing the basics of retail very well and Tesco is not seeing hugely rapid growth but it is consistent. In the light of a zero-sum game for food retail that has put pressure on everybody else.”
Sales at Tesco rose by more than 2% for the first time since 2011, helping the UK’s biggest supermarket chain retain a 27.6% share of the market compared with 15.9% at Sainsbury’s and 15.5% at Asda.
Supermarket sales growth
Morrisons also achieved sales growth in excess of 2% in line with the overall market. Discounters Aldi and Lidl continued to take market share as they increased sales by 7.7% and 9.1% respectively, helped by new stores openings.
But analysts at Bernstein noted that the discounters’ growth had slowed to the weakest pace since 2010, excluding a brief period in late 2016. Analyst Bruno Monteyne suggested the chains were finding it harder to secure new property.
McKevitt said sales growth would now be harder to find for all supermarkets as grocery inflation is slowing. Prices rose by 2.1% in the 12-week period, the slowest pace since March last year, driven by increases in the cost of butter, bottled colas and bread, while the price of fresh poultry and laundry detergent fell.
Amazon has sent shockwaves through the food retailing business with its near $14-billion acquisition of natural and organic food chain Whole Foods.
The move has dominated the financial news over the past three days and has been called a game-changer for the food retailing industry, but could there be wider ramifications for the business supplies industry? We suggest a few things to think about…
Whole Foods locations could be used as collection points for Amazon online sales, providing customers with more delivery options.
Whole Foods stores could act as local distribution hubs for fast delivery, two hours or even less, and give Amazon a stronger last-mile delivery presence.
Amazon’s move could have a disruptive effect on the wider food retailing industry. There is already speculation about the need for accelerated consolidation in the mass and grocery sector, and if that happened that would affect vendors that sell into these retailers.
Amazon has been testing more consumer-friendly retail concepts, such as its Amazon Go initiative where customers just pick items off shelves without the need to go through a checkout. Acquiring Whole Foods will give it a wider test platform and could lead to faster adoption of some of these shopping innovations as well as speeding up digital transformation in the retail sector in general.
We have previously downplayed the idea of Amazon acquiring retail locations in the business supplies channel because there was no indication that it would make a significant move into the retail space. That has now changed, and the Whole Foods deal validates Amazon’s belief in an omnichannel experience that combines the digital and physical worlds.
Could this mean that Amazon now looks to acquire retailers in other business segments, such as office supplies, and that Staples or Office Depot’s stores could be on the Amazon radar? Possibly, especially if Amazon is not happy with the way that Amazon Business is growing; it hasn’t updated its customer and sales figures on Amazon Business in the US since April 2016. Is that because the growth rate has slowed and it’s not getting the traction it thought it would after Amazon Business’ initial success?
The Whole Foods acquisition is reportedly being driven by difficulties Amazon was having in growing its Amazon Fresh grocery delivery business. If Amazon Business is stalling or not growing fast enough, then why wouldn’t Amazon look at buying growth? We now know that this strategy is part of Amazon’s playbook.
By Andy Braithwaite for OPI.net
South Africa’s Steinhoff’s and grocery retailer Shoprite have called off a potential deal to create an African retail giant.
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.”
As a result both companies saw a notable increase in their respective stock prices with Steinhoff’s shares in Johannesburg rising more than 7% since the announcement, while Shoprite’s stock jumped more than 6%.
The deal was the idea of retail magnate Christo Wiese, who owns 16% of Shoprite and 23% of Steinhoff, and would have given Steinhoff a major interest in the R110-billion Shoprite.
According to the Global Powers of Retailing list published in Janaury 2017, Steinhoff International, a manufacturer and retailer of mostly furniture and household goods, is currently the biggest retailer in the country and 72nd in the world.
Shoprite Holdings is the second biggest retail brand in the country, ranked 110th.
The failed marriage of Office Depot and Staples has claimed another CEO. Nearly three months after Staples chief Ron Sargent made his sad exit, the Depot’s top exec Roland Smith announced his departure.
Smith isn’t leaving immediately but will remain as CEO until a successor is named, so tell Shannon in marketing she can stop pretending to casually stand near his office because we all know she’s just trying to call dibs on his sweet desk blotter.
The outgoing CEO, who hasn’t even been with Office Depot for three full years, is also expected to retain his spot as Chairman of the Office Depot board, according to a statement from the company.
“My decision to retire has not been an easy one. In 2013, I set aside a number of personal ambitions to accept a three-year contract with Office Depot, and it’s now time for me to refocus on those priorities,” says Smith in a statement. “I am extraordinarily proud of what the Office Depot team has accomplished these past three years, and I am confident that we will successfully execute our new strategy and grow shareholder value.”
In Feb. 2015, Staples and Office Depot announced a $6,3-billion merger, nearly two decades after federal antitrust regulators blocked the retailers’ first marriage. Then earlier this year, the Federal Trade Commission sued to block this latest deal,
After nearly a year of investigating the deal, the Federal Trade Commission sued to block the merger, arguing that further consolidation would harm competition nationwide in the market for “consumable” office supplies – pens, paper, sticky notes, etc. – sold to large business customers.
In May 2016, a federal judge sided with the government, putting an end to merger, and to the careers of Sargent and Smith, who joined Office Depot while it was in the middle of successfully acquiring OfficeMax.
Earlier this month, Office Depot announced it would close 300 stores on top of the 400 it had already planned to close by the end of 2016.
By Chris Morran for www.consumerist.com
Three months after its proposed tie-up with larger rival Staples failed regulatory muster, Office Depot has said it will launch a quarterly dividend and close an additional 300 stores as it charts a course for remaining a stand-alone company.
Office Depot completed its strategic review of the business and announced moves such as growing its contract channel, optimising retail operations in North America, implementing multiyear cost reductions and returning capital to shareholders.
Meanwhile, the company said Wednesday it swung to a profit in the latest period, helped in large part by the $250-million breakup fee it had received from Staples, and its revenue was lower. The earnings result, excluding the one-time fee and other special items,declined from a year ago, missing Wall Street expectations.
The company plans to trim $250-million in costs by 2018 and initiated a quarterly dividend program at 2.5 cents a share, payable on Sept. 15 to shareholders of record by Aug. 25. The company didn’t specify job cuts were part of its plan to trim expenses but said it would lower overall general and administrative costs.
Office Depot closed 42 stores in the second quarter, ending the period with 1 513 stores in North America as part of its earlier plan to close 400 stores. But Wednesday it said it would close an additional 300 stores on top of that.
Staples agreed in February 2015 to buy Office Depot for about $6.3-billion. In 2013, the U.S. Federal Trade Commission approved Office Depot’s takeover of the smaller OfficeMax. But the FTC argued its tie-up with Staples would mean higher prices and fewer options for big companies that buy office supplies in bulk.
In all for the June quarter, Office Depot earned $210-million, or 38 cents a share, compared with a year-earlier’s loss of $58-million, or 11 cents a share. Excluding items, earnings were three cents a share, compared with six cents a year earlier. Revenue slipped 6% to $3.22-billion.
Analysts surveyed by Thomson Reuters had projected per-share earnings of six cents on revenue of $3.21-billion.
Shares were inactive in premarket trading.
By Joshua Jamerson for www.wsj.com
Office Depot and Staples called off their plans to merge, triggering a trading halt for the companies’ stocks Tuesday.
The retailers made the announcement after a federal judge granted a preliminary injunction Tuesday that had been requested by the Federal Trade Commission, which opposed Staples’ plan to acquire Office Depot for $6,3-billion.
Now the companies “plan to terminate their merger agreement”, Staples said in a statement.
The FTC argued in December last year that combining the two companies would give them too large a chunk of the office supply retail market — which would violate antitrust law.
“We are extremely disappointed that the FTC’s request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case,” Staples CEO Ron Sargent said in a statement.
The NASDAQ halted trading of both companies’ stock around 6:30 pm ET on Tuesday.
It’s the second time the FTC has blocked a merger of the two office suppliers, having halted their merger previously in 1997.
Staples and Office Depot have faced intense competition from retail stores that are not traditional office suppliers like Amazon (AMZN, Tech30) and Wal-Mart (WMT). The industry is also reeling from a decline in printing activities among young consumers, many of whom don’t even own printers.
Profits at both Staples and Office Depot have shrunk in recent years. Last year, Staples announced plans to shut 225 stores in North America.
But the FTC wasn’t focused on competition over dwindling shoppers for office supplies. Instead, the agency pointed to the market for large business customers, where Staples and Office Depot are often the top two bidders.
“By eliminating competition between Staples and Office Depot, the transaction would lead to higher prices and reduced quality,” the FTC said in a statement last December.
The companies had hoped the merger would help create over $1-billion in annual savings.
By Jackie Wattles for www.money.cnn.com
Boca Raton-based Office Depot says regulatory roadblocks are disrupting its business as Staples tries to buy the company.
The office supply giant reported a 9% decrease in sales in the first quarter of 2016, to $3,5-billion from $3,9-billion year-over-year. Its operating income plummeted 19,32% to $71-million in the first quarter of 2016 from $88-million in the first quarter of 2015.
Its net income in the first quarter of 2016 also decreased 2%, to $45-million, or 8 cents a share, from $46-million or about 8 cents a share.
“The protracted regulatory review of the pending Staples acquisition continues to have a substantial disruptive impact on our business,” says Roland Smith, chairman and CEO for Office Depot, in a statement.
“Our North American Business Solutions Division and International Division are more impacted by this disruption and accordingly, both failed to meet our sales and profit expectations this quarter. In spite of the uncertainty surrounding the acquisition, our associates around the world continue to demonstrate focus, drive and dedication as we finalise this process.”
The preliminary injunction hearing has resumed after ending abruptly when Staples asked that the U.S. government’s lawsuit against the company for its proposed $6 billion buyout of Office Depot be thrown out, and its lawyers would not call any witnesses. U.S. District Judge Emmet Sullivan is expected to make a decision on the case May 10.
Staples, based in Framingham, Massachusetts, entered into an agreement to acquire Office Depot on Feb. 4, 2015. Although the company received approvals from regulatory agencies across the world where the companies do business, the US Federal Trade Commission sued Staples in December to block the number and number 2 office supply companies from becoming one corporation.
Office Depot employs about 2 000 high-paid workers in South Florida, but Staples says its headquarters will remain in Massachusetts if the acquisition moves forward.
By Emon Reiser for www.bizjournals.com