$2.3 bln for control of Massmart
JOHANNESBURG? – Wal-Mart is to pay $2.3 billion for control of Massmart, giving the world’s largest retailer a substantial presence in South Africa and paving the way for further expansion across the continent.
The Wal-Mart tie-up will help discount retailer Massmart speed up expansion in sub-Saharan Africa and increase its food retailing business, the South African company’s chief executive said on Monday.
The deal will also likely pit Wal-Mart, which has long battled with organised labour in the United States, against South Africa’s powerful trade unions, some of which have threatened to strike against the U.S. giant.
Massmart’s chief executive, Grant Pattison, said the company would retain its local listing and South African management after the deal. Analysts have said local expertise would be critical to avoid a bruising union fight.
“What isn’t going to happen is a bunch of Wal-Mart people around here start running the company,” Pattison said on a conference call with reporters.
“South African management will continue to manage the business.”
The two companies said in a joint statement Wal-Mart would pay 148 rand for a 51 percent stake in the South African company, which has a presence in 14 countries in Africa. The value of the deal is 16.5 billion rand, Massmart executives said.
Massmart shares were up 0.2 percent at 142 rand at 1345 GMT. Wal-Mart’s bid, including the price, was first announced in September.
(Reuters)
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