Pepkor Holdings Limited (PPH) investor relations material

Deal rationale and strategic fit

• Combines Flash and Shop2Shop to create South Africa’s leading merchant commerce and fintech platform, serving both formal and informal markets with annual throughput exceeding R200 billion.

• Leverages complementary strengths in payments, digital products, and business management tools, supporting merchants’ transition to digital models while maintaining cash accessibility.

• Deepens engagement across a retail-powered platform with 32 million known customers and expands reach across the informal market value chain.

• Lays the foundation for a retail-powered consumer platform beyond formal markets, aiming for significant medium-term value creation and future listing.

• Builds on a longstanding commercial relationship, unlocking shareholder value and supporting a broader retail and financial services strategy.

Financial terms and conditions

• Flash valued at R10.6 billion and Shop2Shop at R10.7 billion, resulting in a combined valuation of R21.3 billion.

• Pepkor will invest R1.57 billion in cash to increase its stake to 57.1% in FintechCo, with Shop2Shop shareholders holding 42.9%.

• The transaction is structured as a merger with a share swap and additional cash investment, classified as a Category 2 transaction by the JSE.

• Shop2Shop shareholders’ stake cannot drop below 15% for five years, ensuring management alignment.

• Shop2Shop's new share subscription proceeds will be used to settle its debt and other obligations.

Synergies and expected cost savings

• Integration will enable cross-selling, expanded product offerings, and optimized footprint across both customer bases.

• Operational synergies are expected to drive higher IRR, with base case IRR above 30% and over 40% including synergies.

• Value creation opportunities identified through integration of systems, data, and people.

• The merger will simplify onboarding and expand the product suite for traders, increasing adoption and efficiency.

• Integrates Shop2Shop’s merchant and payment network with Flash’s VAS and digital product capabilities for greater scale and relevance.