Walmart takes full control of Massmart following US$371m stake acquisition deal
SOUTH AFRICA – South African retailer Massmart has delisted from the Johannesburg Stock Exchange following its full acquisition by American multinational retail corporation Walmart in a deal worth R6.4 billion (US$371m).
Walmart announced its intention to take over Massmart in August through acquisition all of the outstanding shares in the South African entity that it did not already own, excluding treasury shares.
Massmart, which owns prominent local retailers Game, Makro and Builder’s Warehouse, said the deal provides it with the financial and operational support to reach its growth objectives.
“Walmart is excited to be able to build on the long-term commitment we have already made to our South African customers, associates, and partners.
“Most importantly, this transaction represents a positive vote of confidence in Massmart and in South Africa, which will allow us to continue to contribute meaningfully to future economic growth in the region,” said Judith Mckenna, Walmart International CEO.
A cash price of R62 per share was proposed through a scheme of arrangement or a general offer, presenting an opportunity for minority shareholders to realise immediate value in an environment where there are no near-term catalysts for a Massmart re-rating.
Standard Bank Group acted as the sole financial advisor and transaction sponsor for Massmart.
“Massmart is a key component of South Africa’s retail sector which employs thousands of people and contributes to economic growth on the continent.
“As a bank committed to Africa and her people, we recognise the value of this transaction in building Massmart’s resilience in an intensely competitive and challenging economic environment,” said Clive Potter, head of client coverage SA at Standard Bank.
Michael Dempster, executive, advisory at Standard Bank Group, added, “Walmart’s expertise and support will unlock significant growth opportunities for Massmart, which in turn have the potential to create jobs and develop local economies across the region.”
When Walmart, the largest retailer in the globe first acquired 51% of Massmart in 2011, it viewed South Africa as a high-growth market and hoped to grow its presence in the country and spread to parts of the African continent.
But its efforts did not bear the results it had hoped for, despite implementing various strategic interventions, as the retailer has been exiting some of the markets it had set base in the region.
Earlier in October, Massmart 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.”
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