Wal-Mart makes offer for Massmart

27 September 2010

US-based multinational retailer Wal-Mart Stores has made a non-binding proposal to acquire Massmart Holdings, owner of brands like Game, Dion Wired and Makro, valuing the South African company at around R30-billion (US$4.2-billion).

The offer is subject to a number of conditions, including due diligence and a period of reciprocal exclusivity granted by Massmart and Walmart.

“Walmart’s mission is to save people money so that they can live better lives,” Walmart International CEO Doug McMillon said in a statement this week. “We believe this proposed acquisition is a great opportunity to deliver on that mission for all the people in the regions of the African continent where Massmart currently operates.”

‘High-growth markets’

“We are continuing to deploy our strategy to accelerate growth and improve returns in our international business, and this region of the world fits with our focus on large, high-growth markets,” McMillon said.

“This potential combination with a market leader will enable us to add value to an already successful business through investments in people and technology.”

McMillon said that Walmart would respect and honour pre-existing union relationships and was committed to abiding by South African labour laws, while also looking forward to serving communities and working to support the continued development of the region.

‘Compelling growth opportunity’

“South Africa presents a compelling growth opportunity for Walmart and offers a platform for growth and expansion in other African countries,” said Andy Bond, executive in charge of Walmart’s operations in the UK and Africa.

“South Africa possesses attractive market dynamics, favourable demographic trends and a growing economy.”

Massmart, headquartered in Johannesburg, is one of the largest distributors of consumer goods on the African continent and is the leading African retailer of general merchandise, home improvement equipment and supplies. It is also the market-leading retailer of basic foods in the region.

The company runs 290 stores in 13 countries in Africa, with the majority of its stores in South Africa. It operates under the Game, Dion Wired, Makro, Builders Warehouse, Builders Express, Builders Trade Depot, Jumbo and Shield, CBW and CellShack brands.

Black economic empowerment

Bond said that Walmart was fully supportive of Massmart’s black economic empowerment (BEE) programme, and that they expected to continue and build on those efforts, working diligently with the appropriate parties to grow skills and socio-economic development, and to be a corporate and retail role model.

“We also look forward to moving towards a deal with Massmart to offer their associates enhanced opportunities to grow and prosper,” he said.

Walmart has has more than two million employees and more than 8 500 stores under 55 different brands in 15 countries around the globe, recording sales of US$405-billion in the 2010 financial year.

SAinfo reporter

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