• Pepkor is taking legal action to stop former Tekkie Town managers from opening up a new store.
  • Allegations of dirty tricks abound.
  • Pepkor is rebuilding the Tekkie Town management team and digging in for a long fight.

JSE-listed Pepkor has gone to court in an effort to prevent former management of its Tekkie Town business opening up a rival chain. Mr Tekkie is scheduled to open its first store in about six weeks, but says its offering will be more diverse and upmarket than the established shoe business. It says it will oppose any attempt at an interdict.

The court papers detail a raft of issues, including allegations of a conspiracy to depress the Pepkor share price so as to lower the cost of acquisition for former management of Tekkie Town. Business Insider previously reported former management had offered R2bn for the business, but the listed group had demanded R4bn.

Steinhoff-controlled Pepkor says it is confronting “aggressive attempts….to unlawfully compete with Pepkor’s Tekkie Town shoe chain.”

Read: Bruce Whitfield: The bizarre tale of Tekkie Town

Tekkie Town founder Braam van Huyssteen quit Pepkor, then Steinhoff Africa Retail, earlier this year claiming he had been side-lined from leadership positions in the group. Van Huyssteen, a good friend of disgraced former Steinhoff CEO Markus Jooste, subsequently demanded the company vacate the head office building he owns in George.

More than 110 staff walked out of the firm's head office in apparent solidarity with the founder in June and in recent weeks many have been working for the new start-up. Tekkie Town has appointed a new executive team and has filled most of the jobs left by the departing staff.

The relationship appears go have gone bad after Jooste and Steinhoff chairperson Christo Wiese changed the entire operating structure of the business. Tekkie Town had sat in Steinhoff and while its operations were moved to be under Pepkor, its incentive structure remained locked into Steinhoff stock. It was all fine until the Steinhoff share collapsed under a blaze of negative publicity and allegations of accounting fraud that surfaced in December last year.

Read: Game On! Tekkie Town founders will launch a rival chain soon — here's everything we know about it

Since the staff walkout, Pepkor has claimed that a group of former directors had tried to hack into IT systems to not only gather data but also in an attempt to disable point of sale devices. Former Tekkie Town CEO Bernard Mostert has denied the allegations, but in papers filed this week in the Cape Town High Court it’s claimed that there has been a long-running conspiracy to undermine not just the shoe business, but the group as a whole.

“Based on supporting documents, affidavits as well as evidence of retrieved deleted emails, it is clear that all the disruptions in respect of the Tekkie Town business over the last couple of months have been part of an orchestrated plan by the former executives,” said Pepkor CEO, Leon Lourens in a statement.

Tekkie Town has proven to be a disproportionate distraction for Pepkor. It makes up less than 1% of the total store footprint of 5,100 stores, but management at Pepkor have seen fit to slugging it out.

Bruce Whitfield is a multi-platform award winning financial journalist and broadcaster.

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