Last week, Corpcapital, which had originally expressed interest in taking on the whole of the CNA group, said it was not satisfied with the outcome of its due diligence investigation and would not proceed with the heads of agreement.

CNA, with 220 stores and 3600 employees, was plunged into financial crisis after its owners, Gordon Kay & Associates, defaulted on the last R70m instalment of the purchase price due to Wooltru. Last week, CNA was placed under provisional judicial management and over the weekend one of the companies in the group, Consolidated News Agencies, was placed in provisional liquidation.

Shoprite marketing GM Brian Weyers said yesterday Shoprite's interest in CNA was just a rumour at this stage as the group could make a decision only after conducting its investigation.

He said 'everyone was looking at CNA' but doubted there would be bidders for the whole group. 'There are a lot of stores there and some are in good locations and some in bad locations. The solution has a large property component attached to it.'

Apart from the issue of store locations and leases, another hurdle to the Corpcapital deal was, according to financial website Moneyweb, questions over a transaction. MTN paid CNA R85m for exclusivity in CNA stores and this money was used to discharge part of the purchase price due to Wooltru from owners Gordon Kay & Associates. According to Moneyweb, Corpcapital questioned whether this transaction contravened the Companies Act. Corpcapital said yesterday that it could not clarify this issue.

Business Day