Walmart deal approved with terms
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MASSMART (MSM )
| LAST TRADED: | R142.56 |
| CHANGE(%): | 1.76 |
| CUMULATIVE VOLUME: | 2.26m |
| MARKET CAP: | R28.60bn |
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Walmart deal approved with terms
Walmart's takeover of Massmart was given the nod with limited conditions, which is likely to be seen as a victory for the global retailer.
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Johannesburg - The Competition Tribunal approved Walmart's R16.5bn ($2.4bn) bid for Massmart Holdings [JSE:MSM] on Tuesday, saying the retailer must not fire workers for two years.
The conditions imposed on the deal - including a programme for developing local suppliers - will likely be seen as a win for the world’s largest retailer, which said it would walk away from the deal if targets were put on local procurement.
"Today the Competition Tribunal approved the merger between Walmart and Massmart subject to certain conditions," it said in a statement.
Full reasons for the tribunal's decision will be made public within 20 working days.
In January, shareholders voted to accept Walmart's bid to acquire 51% of Massmart for R148 a share. The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.
Walmart operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico. It wants to buy the stake in Massmart to obtain a stake in emerging African markets.
The deal was seen as a test case for major foreign investment in South Africa. Home to the continent’s deepest capital markets, South Africa is also a country where unions hold enormous political influence.
Three government departments and the unions had lined up against the deal, asking the tribunal to impose targets on local procurement and a freeze on job cuts.
The government and unions are concerned about Walmart's global supply network which, they say, could lead to a flood of cheap imports, sparking job losses and squeezing local suppliers.
Massmart shares were up 1.7% at R142.50 immediately following the announcement.
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