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Steinhoff International Holdings and Shoprite Holdings Limited, two South African retailers, said today they are in merger talks to combine their African retail businesses.

The proposed deal is expected to create a “diversified African retail business of significant scale and international geographical reach”, spanning furniture, food and clothing, the companies said.

As part of the proposed deal, Shoprite is expected to buy Steinhoff’s African operations, which includes Pepkor Africa and Steinbuild. Shoprite will then issue new shares to Steinhoff, giving the latter a significant stake in the enlarged Shoprite.

The two companies said their merger talks were initiated by their biggest shareholders – billionaire businessman Christo Wiese, who owns 16 percent of Shoprite and 18 percent of Steinhoff; and the Public Investment Corporation, South Africa’s largest pension fund manager.

The value of the deal was not disclosed, but the companies announced that Steinhoff had agreed in principle to acquire the stakes in Shoprite held by PIC and Titan Premier Investments, which is controlled by Wiese’s family trust. The merged entity will be called Retail Africa, with total revenue of 200 billion rand ($14.6 billion), pre-tax profit of 15 billion rand, and 180,000 employees.

Founded in 1964 in Germany, Steinhoff is an integrated retailer that sells furniture, household goods, and general merchandise in Africa, Europe, and Australasia. In 2014, Steinhoff paid $5.7 billion to acquire Pepkor Holding Limited, the clothing retailer that operates Pep-branded stores across southern Africa, including 50 stores in Nigeria.

The Johannesburg-based compared recently embarked on an acquisition in North America and Europe in a bid to expand its retail business amidst declining sales in its home continent. In July this year, the company paid £597 million for Poundland, a British discount chain, and reached a deal to acquire Mattress Firm Holding Corporation, a Houston-based mattress retailer, for $2.4 billion in cash a month later.