Wal-Mart plans to buy a controlling stake in South African wholesaler Massmart for more than US$2 billion after scaling back its offer for the company’s entire stock, Massmart said yesterday.
“The total transaction is valued at approximately 17 billion rand [US$2.37 billion] for 51 percent of Massmart,” the company said in a statement.
In September, the world’s largest retailer launched an offer for Massmart, but later announced that it was reducing its bid, following talks between the firms.
“If approved, the transaction promises to be very positive for the regional economy, facilitating job creation, providing new opportunities for small and medium businesses and improving competitiveness,” Massmart chief executive Grant Pattison said.
Wal-Mart initially offered US$4.2 billion.
The company said the transaction was subject to a number of conditions, including two-thirds majority shareholder support and approval from the South African antitrust authorities.
Massmart is the country’s biggest wholesaler and operates 288 stores in 14 countries around Africa.
According to Massmart, the majority offer would ensure that the company remains listed on the Johannesburg Stock Exchange, enabling shareholders to continue to participate in future growth. Wal-Mart’s offer angered labor unions, with the powerful Cosatu labor federation calling the company one of the worst union-bashing employers in the world.
The union also feared that the giant retailer, which is known for cheap prices, would undermine local firms.
The Bentonville, Arkansas-based company reported a record net profit of US$3.32 billion in the first quarter of this year, pushed by strong sales in China, Brazil and Mexico.
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