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LVMH acquires Botswana‘s diamonds buyer

LVMH Moët Hennessy – Louis Vuitton SE, the world‘s largest luxury goods giant has reached an agreement with the board of Tiffany & Co, in a move that will see the company purchase the world most iconic jeweler.

This week Global business corridors were awash with the historic acquisition which will see the French multinational luxury goods conglomerate cement its position as a universal elite’s goods powerhouse. The Paris headquartered empire run by Billionaire Bernard Arnault will bring the iconic American jewelry brand into its fold at a cost of over $16 billion, making it the biggest luxury brand acquisition ever and adding to the firm’s portfolio, which includes Louis Vuitton and Sephora.

The watershed deal was confirmed by LVMH on Monday. According to Forbes LVMH will acquire Tiffany for $135 per share in cash, for a total of $16.2 billion ,almost $2 billion higher than the initial bid that LVMH made for the luxury jeweler in October. Tiffany will sit among LVMH’s 79 brands, in its watches and jewelry division. Global analysts say the deal will strengthen LVMH’s position in North America and build on its foundation in the jewelry market. The deal is expected to go through in the middle of 2020, LVMH said.

 Shares of the Paris-based fashion house were up 2% on Monday morning, while Tiffany shares were up 6% in premarket trading. LVMH Chief Executive Officer & Chairman Bernard Arnault told global media houses that his company was excited to bring Tiffany into its fold. “We have an immense respect and admiration for Tiffany and intend to develop this jewel with the same dedication and commitment that we have applied to each and every one of our Maisons.”

New York Times says the acquisition will give LVMH a bigger foothold in the United States, as well as help Tiffany in Europe and China. It will also cement the status of Bernard Arnault, the LVMH chairman and chief executive, as the most acquisitive deal maker in the luxury business.

TIFFANY & BOTSWANA

LVMH’s acquisition of Tiffany & Co makes the Benard Anault run conglomerate one of the most important businesses in Botswana major economic sectors. Tiffany & Co is one of the major buyers of Botswana’s polished diamonds. In 2011 Tiffany opened a full diamond polishing and sorting factory in Botswana, valued at $4.8 million. In January this year the 182 year old American Jeweller in a bid to increase its transparency and raise ethical jewelry standards across the industry announced that it would expand its diamond polishing operations in Africa, particularly Botswana.

Botswana, the world's largest diamond producer after Russia, is the only African country where Tiffany & Co both buys and manufactures its stones. About 80% to 90% of Tiffany's polished diamonds are acquired and manufactured through its Antwerp-based subsidiary, Laurelton Diamonds, which sources stones mined by De Beers from their operations in Botswana, Canada, Namibia, South Africa as well as Russian giant Alrosa , amongst others. Laurelton has manufacturing operations in Belgium, Botswana, Mauritius, Vietnam and Cambodi.

 MASISI’S VISIT TO TIFFANY

Early this year President Masisi visited Tiffany & Co headquarters in New York and held talks with the company executives. He noted that Tiffany will continue being Botswana‘s major trading partner in the diamond business. Masisi’s visit to Tiffany was just a few months after Tiffany & Co Chief Executive Officer, Alessandro Bogliolo visited Botswana.

While in Botswana Bogliolo paid a courtesy call on President Masisi where he highlighted that his company is what it is because of quality and ethically sourced diamonds mined in Botswana. Tiffany & Co started buying Botswana diamonds 50 years ago and had been operating polished factories in Botswana for the past 12 years employing about 200 people majority of which are citizens.

TIFFANY TAKEOVER MAKES BERNARD ARNAULT SECOND RICHEST PERSON ON EARTH

According Forbes, Bernard Arnault, Chairman and CEO of LVMH (LVMHF), is now worth nearly $108 billion.Arnault's net worth jumped more than 1% Monday and nearly another 3% Tuesday along with LVMH's stock following his company's agreement to buy Tiffany (TIF) for more than $16 billion.

Arnault and his family own more than 47% of the French luxury goods giant. The spike in LVMH shares puts Arnault just ahead of Microsoft (MSFT) co-founder Gates, who has a net worth of $107 billion, and trailing only Amazon (AMZN) CEO Bezos, who tops the Forbes list with a fortune of just over $110 billion.

LVMH’S TOURISM INTERESTS IN BOTSWANA

Having clinched on a lucrative value chain stake in Botswana’s diamond industry LVMH Moët Hennessy – Louis Vuitton SE now has billion dollar interests in Botswana’s two major economic sectors. Early this year Botswana’s Competition Authority approved an acquisition by the French conglomerate.

The billion dollar global powerhouse acquired Belmond Botswana, a company that operates Eagle Island Lodge which is situated in the Okavango Delta in Xaxaba Island. The lodge is Botswana’s host of the world leading personalities, musicians, billionaires, royals and business people who visit the tourists’ attraction country.

Early this year LVMH completed acquisition of Belmond Group for $25.00 per Class A share in cash mirroring equity value of $2.6 billion in transaction and $3.2 billion in enterprise value. This transaction directly gave LVMH full ownership of three safari lodges in Botswana being Belmond Kwai River Lodge, Belmond Savute Elephant Lodge and the Belmond Eagle Island Lodge.

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Inflation spike building further upwards

27th October 2020
Inflation spike

In the coming months prices will go up and inflation will shoot sharply above the target of 3 percent to 6 percent towards the third quarter of 2021, the Bank of Botswana on the other hand will continue to withhold its knife on the Bank Rate. This is according to a forecast made by Kgori Capital in its recent Market Watch Segment.

Statistics from Statistics Botswana show that the recent 1.8 percent increase in the September inflation, from 1 percent in August, was a reflection of the upward adjustment in public transport fares (Transport (from -6.9 to -3.9 percent) in September 2020, which is estimated to have increased inflation by approximately 0.64 percentage points.

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Plans to erase Edgars, Jet trademark from Botswana malls underway

27th October 2020
Edgars Jet trademark

Local anti-trust body, Competition and Consumer Authority (CCA), this month received back to back acquisition proposals from South African clothing retailers to wipe out their former rivals, Edcon, from Botswana malls.

Last week BusinessPost was in possession of Merger Notice No 23 of 2020 whereby a South African clothing retailer owner, Retailability Proprietary Limited, through Oclin Proprietary Limited, proposed to acquire parts of the Edgars business conducted by Edcon in Botswana (through Edcon Botswana), as a going concern, consisting of certain assets and identified liabilities.

South African government’s Business Rescue Practitioners earlier this year announced that Retailability will buy Edgars, after the latter filed for a business rescue plan in April after it failed to pay suppliers. This move will see Retailability add Edgars to its portfolio consisting of brands such as; Legit, Beaver Canoe and Style.

Retailability landed on Botswana shores 18 years ago with its flamboyant urban fashion Style which had 17 stores. Style, having almost the same target market as Edgars as it offers men’s and ladies’ contemporary and formal fashion, gave the 91 year old legendary clothing retailer a run for its money, and has won the battle as its parent company has taken over Edgars.

Retailability brands are synonymous with Botswana shopping centres and there are currently five (5) Beaver Canoe stores, 10 Style stores and seven (7) Legit stores across this country. The Beaver Canoe stores sell clothing apparel for men and boys only. The Legit stores have a fashion store format which focuses on the retailing of clothing, footwear, accessories, colour cosmetics and cellular products.

Retailability operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and Eswatini. Many observers suggest that because of the deal with Retailability to swallow Edcon, most Edgars stores in Botswana will change their name and be branded Style. A sad tale for religious consumers of the Edgars trademark who got used to love their favourite brand for years.

According to CCA’s Merger Notice No 23 of 2020, Retailability is controlled by Clifford Raymond Lines (through a company which functions solely as a holding company of his interests in Retailability) and Metier Investment and Advisory Services Proprietary Limited (“Metier”). Metier is a private equity enterprise with investments in a number of industries spanning from healthcare, hospitality, FMCGs and telecommunications.

Retailability directors are mostly South Africans; Clifford Raymond Lines, Mark Richard Friday and Norman Victor Drieselmann. Only Nasreen Essack, who was appointed February this year, is a Motswana. He comes after Brian Thuto Tsima left on the same date. Retailability 100 percent owns Oclin Proprietary Limited, the company it is acquiring Edgars with, by a capacity of 3000 shares.

The target business, Edgars, offer textiles, cosmetics and cellular products. Edcon has a Motswana director, Charles Mzwandile Vikisi, a South African, Shane Van Niekerk and Zimbabwean Jethro Kamutsi.

“The Target Business comprises of two (2) Edgars franchise brands and private label stores across Botswana. These stores target middle to upper income customers and are home to a range of private label brands such as Free2BU, Charter Club and Stone Harbour, and a wide range of market label brands (such as Levi’s and Guess) for clothing, footwear and cosmetics.

In addition, the Target Business operates iconic Edgars Home and Edgars Beauty stores as store-in-store formats rounding out the department store offering in Botswana,” said CCA.
Foshini also lines up to take Jet Botswana from Edcon.

The Foschini Group (TFG) released a statement confirming its latest intentions to acquire Edcon assets or Jet for a cash purchase consideration of R480 million. This was after the business rescue practitioners offered TFG to buy Jet by that amount.

CCA is currently mulling on a proposed merger by TFG to take over Jet operations in Botswana. Merger Notice No 21 of 2020 from TFG came a few days before the Retailability proposal. In this merger TFG, acting through Foschini Botswana, want to take over “parts” of the Jet business conducted by Edcon through Jet Supermarkets Botswana.

TFG will be willing to add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents. TFG will also get Jet’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. Also part of this fat deal is that the company is looking to also acquire JET Club and all existing JET stock of no less than R800 million.

Johannesburg listed TGF owns Foschini Retail Group which owns the local operations called Foschini Botswana, the acquiring enterprise according to CCA merger notice. “TFG is not controlled by any enterprise/s and for completeness, the three largest shareholders of TFG holding shares greater than 5% as at 27th March 2020 are: Government Employees Pension Fund (16.2%) Public Investment Corporation (13.2%); Old Mutual Limited (6.7%); and Investec Asset Management (6.3%). The remaining issued share capital in TFG is widely held,” said the merger notice.

Only Abdool Rahim Khan is a Motswana in the Foschini Botswana directorship, the rest; Ganeswari Shani Naidoo, Anthony Edward Thunström and Gustav Jansen (alternate director) are South Africans.

According to the CCA merger, the Jet Business is Edcon’s discount department store division, selling clothing, footwear, homeware and some cosmetics as well as cellular products and targets lower-to-middle income consumers throughout Botswana. The Jet Business does not directly or indirectly control any enterprises, says the notice. CCA seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication to the following address.

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BOCRA, associates to provide broadband internet in schools

27th October 2020

Botswana Communications Regulatory Authority BOCRA signed a memorandum of Agreement (MoA) with the Ministries of Transport and Communications (MTC), Basic Education (MoBE) as well as Local Government and Rural Development (MLGRD).

The MoA seeks to continue the collaboration that dates back to 2016 when the three parties first agreed to work together in a project aimed at computerizing and providing broadband Internet to primary schools in remote and underserved areas of Botswana.

The project benefitted 68 primary schools and 9 secondary schools through the construction of Local Area Network (LAN) in each primary school, provision of 5 Mbps dedicated broadband Internet to each Primary School and provision of Wi-Fi enabled tablets, laptops and related peripherals such as printers and copiers.

Further, the project will see the augmentation of computers in 9 Junior Secondary Schools with 30 laptops per identified school and employment of Information Technology (IT) officers at each primary school.

When speaking at the signing ceremony in Gaborone, Chief Executive of BOCRA and Chairperson of Universal Access and Service Fund (UASF) Board of Trustees Martin Mokgware said the project’s ultimate goal is to facilitate pupils in schools and host villages to be able to play a meaningful role in the digital economy.

Mokgware indicated that this necessitates upgrading of existing Telecommunications infrastructure to high capacity broadband that will support delivery of education, accessibility to the quality Internet and usage of ICTs.

The Fund began its inaugural programme by sponsoring the provision of WiFi hotspots in public areas around the country as its first project. Following the successful implementation of public WiFi hotspots, the Fund identified Kgalagadi, Ghanzi and Mabutsane areas for mobile network upgrades, schools computerization and internet provision.

Conscious that the project would not be possible without buy-in and support from MoBE, MTC and MLGRD, the Fund facilitated the signing of the first MoU between the three parties in 2016 for implementation of the project.

BOCRA Chief Executive said the signing of this agreement is aimed at benefitting the Kweneng District, adding that they have already assessed the area and have determined that they will be covering 62 underserved villages and 119 schools, 91 of which are primary schools.

“This is a project for which the partner Ministries need to re-commit for its success. Lessons from the previous schools’ computerization and internet connectivity project require that we increase our involvement and resources dedicated to the project for it to be successful. It is my belief as the project coordinator, that we will not do things the way we did them during the first project, for if we do, then we will not have learnt anything,” he said at the signing ceremony.

The purpose of learning is so that there can be continuous improvement to minimize the length of time and amount of resources utilized, he said expressing confidence that their partners will step up to the plate and ensure they play their part in the implementation of the project and that it will progress smoothly having already tread along a similar path.

UASF’s role lies mainly in funding and project management. According to Mokgware, once the project is completed, the work to integrate ICTs into the classroom begins in earnest. Therefore, he said, the project will not succeed without full cooperation and oversight of partners.

“MoBE will put in place the necessary content and ensure that the curriculum is available to all. MLGRD will provide, among others, the enabling environment by ensuring readiness of the school’s infrastructure and necessary security.”

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