JOHANNESBURG, June 6 (Reuters) – Absa, the South
African unit of Britain’s Barclays Plc, will pay 10
billion rand ($1.18 billion) to buy the private label store card
portfolio in South Africa of clothing and footwear retailer
Edcon, the companies said on Wednesday.
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 percent at 152 rand by 0725 GMT,
outperforming a 0.08 percent rise in the JSE Top-40 index of
blue chip companies.
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