Mr Price pushing ahead with controversial deal to buy European company for R10 billion
Mr Price says it is making progress on parts of the deal to acquire European retail NKD, but the move has received massive backlash from investors.
Mr Price announced in December that it would acquire Pegasus Group Holding GmbH, which trades as NKD Group’s retail business, in a deal valued at R9.66 billion.
NKD operates in the European value apparel and homeware retail sector, with over 2,000 stores across Germany, Austria, Italy, Croatia, Slovenia, the Czech Republic, and Poland.
The European retailer generated net sales of €684.57 million for the fiscal year ended 31 December 2024.
Mr Price has now announced that it is continuing to make progress in fulfilling the conditions contained in the binding transaction agreement signed on 9 December 2025.
The key outstanding condition is approval under the European Commission’s Foreign Subsidies Regulation.
Mr Price said that the review period for the submission has commenced, and no undue delays are expected.
Mr Price shareholders have also been advised that the group plans to host an Investor Presentation on 17 March in Cape Town to provide further insight into NKD and its growth prospects.
It said that details, including venue, timing and the link to join the live webcast of the presentation for remote participants, will be provided in due course.
Outrage over the deal
The move to acquire NKD drew an immediate backlash in markets, with the Mr Price share price declining by R6 billion.
Shareholders are now pushing to scrap the deal, arguing that the agreement could be another example of successful South African retailers failing internationally.
Benguela Global Fund Managers is a prominent critic of Mr Price’s move and has highlighted that the NKD deal could result in long-term destruction of shareholder value.
Benguela said that the European retailer offers extremely low margins, likely in the region of 1% to 2%, even in benign trading conditions, which is far below Mr Price’s typical margin between 9% to 14%.
It added that Mr Price’s current return on equity (ROE) is 27% compared to NKD’s approximately 13%.
“Based on NKD’s 2024 profit after tax and the midpoint of Mr Price’s proposed acquisition consideration, the earnings yield or return on investment is 2.9%,” said Benguela.
“Acquiring a structurally low-return business at scale dilutes group returns, even before execution risk is considered.”
The deal would also place R6 billion in debt on Mr Price’s balance sheet. At current interest rates, the interest charge of over R400 million would likely exceed the profit generated from NKD.
The South African operations are thus expected to subsidise a loss-making European subsidiary for the foreseeable future, which will hurt the group’s overall ROE.
Benguela has also escalated matters to the JSE and the Financial Services Tribunal of the FSCA, calling on Mr Price’s acquisition drive to be deemed a category 1 transaction.
Category 1 transactions account for over 30% of a company’s market cap and need shareholder approval.
Since 2021, Mr Price has acquired Studio 88, Yuppiechef, and Power Fashion. When combined with NKD, these acquisitions total R17.6 billion and would add over 3,000 stores to its network.
Benguela said that individual announcements may be classified as Category 2 or smaller, but have a transformative impact when combined.
Benguala also requested that Mr Price be forced to seek shareholder approval for the NKD deal via a general meeting and circular, which would contain relevant financial and risk assessments.
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