Wal-Mart moves closer to South African market entry
by January 17, 2011 11:57 am 62 views
The Wal-Mart move into South Africa took another step forward Monday (Jan. 17) when more than 97% of Massmart shareholders approved a $2.41 billion buyout by Wal-Mart of 51% of Massmart shares.
Bentonville-based Wal-Mart Stores Inc. first announced in September its intent to acquire a majority stake in Johannesburg, South Africa-based Massmart Holdings, a retailer with 290 stores in 13 African countries.
Approved was a $21.39 per share price (148 Rand) that required at least 75% approval from shareholders.
At the time of the announcement, the transaction would increase the number of Wal-Mart retail stores/units by almost 3.5% and would build upon the company’s growing international sector. South Africa has a population of around 50 million, and its 2009 GDP of $488.6 billion ranked the country’s economy as the world’s 26th largest.
Kevin Gardner, senior director of International Corporate Affairs for Wal-Mart, said Monday the company still believes the deal will result in “significant mutual benefits for consumers, employees, and shareholders.”
“Massmart is well-positioned in South Africa, and with operations in 12 other countries, and they represent a solid platform for growth on the African continent,” Gardner noted.
Wal-Mart Stores operates 8,692 retail units under 59 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, the company employs more than 2 million people worldwide. Massmart Holdings operates in 14 countries in sub-Saharan Africa through four divisions comprising 288 stores.
A Massmart statement said court approval of the transaction will be sought as early as Feb. 1.
Published reports indicate that labor unions now affiliated with Massmart will protest the deal through boycotts and other measures. Wal-Mart officials have said they will honor labor agreements already in place.
The South African Commercial, Catering and Allied Workers Union has threatened to challenge the Wal-Mart move to acquire 51% of Massmart because it sees Wal-Mart as being antiunion, according to this report from the Wall Street Journal.