Massmart fails to find potential buyer for East, West Africa-based Game stores, mulls closure

EAST/WEST AFRICA – Restructuring South African retailer Massmart, has started the process of closing its Game stores in East and West Africa after failing to find interested buyers.

Late last year, the retailer highlighted that it had put up 14 Game stores in Nigeria, Ghana, Kenya, Uganda, and Tanzania, up for sale to local investors and entrepreneurs with a “more intimate understanding of regional and local market conditions.”

Massmart initiated a process over a 12-month period to investigate its viability, “Unfortunately, this initiative did not deliver a meaningful outcome.

“Consequently, we have initiated potential store closure consultations with our staff members in our Game stores in East and West Africa,” highlighted the company in a statement.

The decision to dispose of the stores in the earmarked regions is attributed to currency devaluations, low commodity prices, and high inflation, factors that also drove away giant retailers like Shoprite and Choppies from some of those markets.

As part of its turnaround plan, Massmart sold its Dion Wired stores last year and entered into a deal with Shoprite for the sale of some of its units for R1.36 billion (US$89m).

Under the deal, Shoprite is buying Cambridge Food, Rhino Cash and Carry business comprising 56 grocery stores, including 43 adjacent liquor stores; three Fruitspot businesses; Massfresh Meat business with a meat processing facility; and 12 Masscash Cash and Carry stores.

The South Africa Competition Commission has already given nod to the deal but other competing retailers such as Pick n Pay and Spar have objected the move, citing it will give Shoprite more dominance in the sector and lessen competitiveness.

To sustain the retailer’s turn-around strategy, Massmart’s parent company Walmart has offered to purchase the remaining stake in the owner of Makro, Game and Builders Warehouse, for a price of R62 (US$3.6) per share by way of a scheme of arrangement or a general offer if the scheme of arrangement does not become operational.

Walmart acquired a 51% stake in Massmart Holdings in 2011 for R17 billion (US$2.4 billion) then.

The potential offer, if finalized, will provide Massmart with needed access to financial and operational support from Walmart to sustain its growth, which has been impeded by external factors such as Covid-19-related trading restrictions, civil unrest in KwaZulu-Natal, and a challenging economic environment.

In its half-year results for the 26 weeks to 26 June 2022, its total sales from continuing operations totaled R38.1 billion (US$2.25 billion), representing an increase of 1.9%.

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