The acquisition was implemented after both parties agreed the fulfilment of the final conditions in Johannesburg.
The Competition Tribunal approved the deal in September 2012 for the sale of the store card portfolio and the long-term strategic relationship agreement with Absa. Absa expects to acquire the remaining portion of Edcon's South African store card portfolio in due course.
Commenting on the deal, Absa's head of retail markets, Arrie Rautenbach said, "We are now able to broaden the financial services offered to existing as well as new customers and deliver the expected benefits to shareholders, while continuing our legacy as the largest retail bank in customer base in the country."
He describes Edcon's debtors book of over 3.8 million clients as "a unique asset", also stating that Edcon was an ideal partner as South Africa's largest clothing retailer and parent company of Edgars, Jet and Legit. "This provides the bank with exceptional customer reach. It signifies a strategic move that lays the foundation for our future earnings growth."
With the conclusion of the Edcon transaction, Absa will be responsible for the credit (including collections strategy), fraud and risk management of the card portfolio. It would also be responsible for the legal, financial management and compliance functions for this portfolio.
Providing guidance on the bank's direction moving into 2013, he said expanding bank outreach through partnership models with retailers, such as that of Edcon, was an increased focus and key for the bank to capture growth opportunities.
Citing the bank's in-store banking facility and rewards programme that worked on an extensive retail store partnership, he said synergies generated by partnerships between the bank and retailers was a critical success factor in its ability to deliver full value banking to the end customer.
Edcon is in the process of finalising financial results for the thirteen week period ended 29 September 2012. As the announcement of the first closing of the sale of the private label store card portfolio is outside of its usual reporting timelines, the group advises bondholders earlier than usual of the key financial results:
Further details will be made available together with its quarterly financial results on 27 November 2012.
