The deal, whose value was not disclosed, would form a no-frills retailer spanning food, furniture and clothes and underline the determination of tycoon Christo Wiese to put more of his assets under one roof.

Both Shoprite and Steinhoff, the owner of UK’s Poundland and U.S.-based Mattress Firm, count South African retail magnate Wiese as their biggest shareholder.

Wiese, South Africa’s third-richest person with a net worth of $6.3 billion, owns about 16 per cent of Shoprite and 23 per cent of Steinhoff, where he is also a chairman.

“This is Christo Wiese looking to organise assets, and having Shoprite and Steinhoff assets in one entity in Africa is plus,” said Sasha Naryshkine, an analyst at Johannesburg-based money manager Vestact Limited.

He added: “This will be one of the biggest, if not the biggest retail companies in Africa, with fingers in lots of pies.”

“This is a big move,” said Ashburton Investment’s fund manager, Wayne McCurrie.
“It will certainly change the retail environment in Africa because these are two major groups getting together.”

Under the proposed deal, Shoprite would issue shares to Steinhoff in exchange for its assets on the continent that include clothes discount Pepkor and furniture business JD Group.

The transaction would give Steinhoff, which vies for global market share with Sweden’s Ikea, a significant equity interest in Shoprite, an $8billion company with operations in more than a dozen African countries that include Ghana, South Africa, Nigeria and Angola.

The combined businesses would be called Retail Africa, and would bring together Steinhoff-owned chains such as Pep and Ackermans with Shoprite and Checkers supermarkets.
Wiese told Reuters in September that a full merger of the two companies would be a “natural development”.

Shoprite opened its first store in Ghana in 2003, offering a wide range of quality products and excellent service.