Pepkor Explores Takeover of Brazilian Retailer Avenida

(Bloomberg) -- Pepkor Holdings Ltd., Africa's largest clothing retailer, is exploring a potential takeover of Brazilian peer Grupo Avenida SA, people familiar with the matter said.

The South African company is considering paying more than 1 billion reais ($190 million) for about a 70% stake in Grupo Avenida, according to the people, who asked not to be identified because the information is private. A deal could provide an exit for Grupo Avenida's private equity backer, Brazilian investment firm Kinea, the people said.

Pepkor's move comes after Grupo Avenida scrapped plans last year for a domestic initial public offering. The Caseli family, which founded Grupo Avenida in 1978, would likely keep a stake in the fashion retailer following any deal, the people said. 

Representatives for Pepkor and Kinea declined to comment. A spokesperson for Grupo Avenida didn't immediately respond to a request for comment. 

Pepkor, a specialist in discount retailing, has previous experience in running operations in emerging markets like Poland and has been looking for ways to expand outside the African continent. A deal involving Grupo Avenida would mark the company's first foray into South America.

Chief Executive Officer Leon Lourens has previously said the Cape Town-based company must “find new ways of expanding.” Any acquisitions outside Pepkor's home market would most likely be in a company that isn't too big, has proved itself, needs capital and has good management, Lourens said in a September interview. 

Shares of Pepkor have rallied about 45% in the past year, outperforming a benchmark of South African-listed retailers. 

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