Wal-Mart to enter Africa with regulatory approval for Massmart
01 Jun 2011
The South African competition regulator finally approved WalMart's $2.4 billion bid for a majority stake in Massmart, operator of 288 stores in Africa, paving the way for the world's biggest retailer to enter into the African continent.
The 51-per cent acquisition by the Arkansas-based retailer would be its biggest purchase after it acquired British supermarket chain Asda in 1999 for $11 billion.
Armed with a $5-billion war chest for overseas acquisition, WalMart International president Doug McMillon had last year sold the company's expansion plan to a group of investors in the US. According to him, spending in sub-Saharan Africa is expected to grow from $860 billion in 2008 to over $1.4 trillion in 2020.
Commenting on the approval, McMillon yesterday said ''We're pleased that the competition authorities have recognised the benefits that our investment in Massmart can deliver. We look forward to creating new jobs in South Africa, support for the development of South African exports, and providing previously underserved customers and communities with better prices and increased access to the products they want and need.''
In September 2010, Wal-Mart made a $4.2-billion takeover offer for Massmart, but a month later toned decided to make a partial offer to acquire 51 per cent rather than a full buyout after it faced opposition from the Congress of South African Trade Unions (Cosatu), which said that the acquisition would lead to job losses and put local suppliers out of work.
Analysts had said that the South African government also may have played a role in Wal-Mart abandoning its bid for a total takeover of Massmart since the US retailer comes with a reputation of killing local competition.
