Pretoria - Massmart planned to grow the Builders Warehouse and Tile Warehouse businesses it acquired last week into a national chain, Linton Lewis, the former owner of the two brands, said at the weekend.
But Lewis said this would only occur once the businesses had been fully integrated into Massmart, the listed wholesale and retail company including Makro, Dions and Game.
His comments followed Massmart's announcement last week of the acquisition of the Builders Warehouse and Tile Warehouse businesses for R140 million in cash, with an additional cash consideration of R25 million depending on performance.
Builders Warehouse and Tile Warehouse, both family businesses established 60 years ago in Pretoria, serve the burgeoning home improvement industry and small builder, largely on a cash-and-carry basis. They have an annual turnover of about R500 million.
The businesses will be placed in the Massmart division Masswarehouse, which currently only comprises Makro.
Lewis emphasised that the sale must in no way be construed as a merger. All staff would be transferred to the new company and he would remain with the company in his present capacity.
"I've been contracted to head up the business for Massmart until February 2004," he said.
Succession planning was the reason for the sale, he said. He had grown concerned about what would happen to the business if anything happened to him.
"We're on a tremendous expansion and growth phase. I would have liked to have held on for another year or two but then this offer came up."
He said the sale would allow the business to evolve from a private family business to a division of a listed company that had the expertise and capacity to grow it exponentially.
The acquisition was in line with Massmart's vision and growth strategy. "It is not the intention of Massmart to merely devour Builders Warehouse and Tile Warehouse but distinctly to grow the two brands into a national chain, which fulfils the prime consideration of securing the future of all staff in a growing company," he said.
Lewis said the business was started in Pretoria by his late father Sidney. He and his brother Hilton, now deceased, had taken over in the late 1980s.
Massmart stock increased 16c to R15.56 on Friday.