Steinhoff in tax probe

Steinhoff says its German unit had been searched in connection with a tax investigation.

Johannesburg - Steinhoff International Holdings, the South African furniture chain that plans to start trading on the Frankfurt Stock Exchange on Monday, said its German unit had been searched in connection with a tax investigation. The shares fell the most in almost 18 months.

“The authorities are reviewing the balance sheet treatment of certain transactions involving transfers of participations and intangible assets,” the Johannesburg-based company said in a statement in Friday.

Steinhoff Europe Group Services “is fully committed to support the authorities, and has begun to take immediate steps, in clarifying and resolving these matters,” it said.

The stock slumped as much as 8.1 percent to R76.25, the most since July 3, 2014 and traded at R76.37 as of 10:08 a.m. in Johannesburg. Management is of the view that taxation matters have been properly reflected in its group accounts, the company said.

Steinhoff is listing on the German stock exchange to increase its exposure to investors on the European continent, where it owns the French retailer Conforama.

It also has operations in the UK and Germany. Sales on the continent gained 6.4 percent for the 12 months through June. Steinhoff is also seeking to become one of the world’s biggest discount retailers following the purchase of Pepkor.

BLOOMBERG