South African fashion and homeware retailer Mr Price has agreed to buy German-based value chain NKD Group in a transaction worth up to 487 million EUR (around $568 million USD), marking its first move into the European market. Announced on December 10, 2025, the deal signals a clear strategic shift for the Durban-based group, which has largely concentrated on South Africa and nearby African countries.
Following the announcement, Mr Price shares fell about 12.3% by 1212 GMT as investors questioned the valuation and the risks of a large offshore expansion. The market reaction reflected long-standing caution in South Africa, where earlier international pushes by local retailers have often ended in costly retreats.
Management says the agreement offers a chance to secure immediate scale in a resilient European discount segment. By taking over an established chain that already targets budget-conscious shoppers, Mr Price aims to accelerate growth without the time and expense of building a new brand and network from the ground up.
NKD Footprint And Market Position
NKD Group operates 2,108 stores across seven Central and Eastern European countries, selling low-priced clothing, home textiles and basic household goods. This positions the company firmly in the value retail segment that has been expanding faster than the wider apparel and homeware market.
Data cited by Mr Price indicate that value retailers now account for roughly 22% of the European market, supported by persistent cost-of-living pressures on households. The buyer sees NKD’s footprint and customer base as complementary to its own, allowing it to apply experience in merchandising, sourcing and cost control to a broader platform.
Chief executive Mark Blair said the deal was underpinned by similar operating philosophies at the two companies, with both focused on affordable ranges and disciplined stock management. The seller is an entity controlled by funds managed by TDR Capital LLP, and the transaction covers all NKD shares as well as income on shareholder loans, giving Mr Price full ownership once the deal closes.
Financing, Revenue Uplift And Debt Load
The acquisition will be funded through a mix of existing cash reserves and debt facilities, according to Mr Price. After completion, the purchase of NKD Group is expected to lift Mr Price’s annual revenue to about 53 billion rand (around $3.12 billion USD), up from 40.9 billion rand in its latest financial year.
The combined business will operate more than 5,000 stores, compared with roughly 3,100 outlets before the transaction, giving the group a significantly larger physical presence across two continents. The deal will add an estimated 5 billion to 6 billion rand of new borrowings, altering the company’s capital structure.
While management argues that leverage will remain at comfortable levels, the additional debt has become a central issue for analysts reassessing the group’s risk profile. Foreign-exchange guidance in the transaction refers to rates of $1 = 0.8581 euros and $1 = 17.0122 rand, underscoring the multi-currency nature of the acquisition and the potential impact of moves in the euro and rand.
Investor Concerns Over Price And Strategy
Despite management’s upbeat tone, some investors and analysts remain sceptical. Portfolio manager Casparus Treurnicht of Gryphon Asset Management estimated that the acquisition values NKD at a price-to-earnings multiple of around 35 times, which he described as high for a value-focused retailer. That assessment has fuelled debate over whether Mr Price is overpaying for its entry into Europe.
Senior equity analyst Alec Abraham at Sasfin Wealth highlighted the broader history of South African retailers’ offshore ventures, many of which have eventually unwound after disappointing results. Those experiences have left shareholders wary of another ambitious foreign push, especially when it involves a sizable outlay and a higher debt burden.
Mr Price itself has previously pulled back from Nigeria, Australia and Poland, adopting a cautious stance on international operations. The NKD purchase therefore marks a departure from that approach, signalling renewed appetite for growth beyond Africa but also raising questions about execution, integration and competition in Europe’s crowded discount sector.
The company insists that the fundamentals behind the deal are compelling: a growing value segment, a sizable store base and a business model that closely mirrors its own. The sharp fall in Mr Price’s share price suggests investors will now look for detailed guidance on integration plans, cost synergies and expected returns before fully endorsing the group’s new European strategy.
