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Johannesburg – Fashion, food and homeware group Woolworths will sell a 10% stake to employees in a black economic empowerment (BEE) deal, the company said on Monday.

Woolworths said the estimated economic cost of the transaction will be R292m, representing about 1.38% of its market capitalisation. “The board recognises the social and economic imperative to undertake a BEE ownership transaction and following an extensive process has decided to propose a BEE ownership transaction involving eligible Woolworths employees,” the retailer said in a statement. Woolworths said blacks made up 90% of its employees, of whom 85% were women. The South African government has been encouraging companies to offer stakes to blacks and to accelerate employment equity in a bid to encourage their role in the mainstream economy following the exclusion of blacks under apartheid rule. Woolworths said it would create a new class of convertible, redeemable, non-cumulative participating preference shares with a par value 0.15c each. The firm said that at appropriate times it would issue these shares – up to a maximum of 89.4 million shares to the Woolworths Employee Share Ownership Trust valuing the deal at R134.1m.