Walmart approach has been formalised as Massmart receives a firm offer for controlling interest (Photo: Massmart)

Walmart Confirms Offers to Acquire 51 Percent of Massmart

Wal-Mart Stores Inc. (Public, NYSE: WMT) has announced that it has offered to acquire 51 percent of the shares of Massmart Holdings Limited (Public, JSE:MSM) for ZAR 148.00 per Massmart ordinary share. Massmart will continue to trade on the JSE Limited to provide Massmart shareholders with the ability to participate in the growth opportunity of the combined entity. 

Massmart’s wholesale and retail brands include Makro, Game, Dion Wired, Builders Warehouse, Builders Express, Builders Trade Depot, CBW, Jumbo Cash and Carry and the Shield buying group

The offer, which represents a 19.2 percent premium to the 30-day weighted average price on September 23, the last trading day prior to the indicative offer announced on September 27, 2010, has been unanimously recommended by the Massmart Board of Directors.

Doug McMillon, President and CEO, Walmart International

Doug McMillon, President and CEO of Walmart International, said: "We continue to be excited by the opportunity to invest in Massmart’s business and to accelerate its growth and expansion in South Africa. The more we learn about South Africa and the surrounding countries the more we are convinced that this is an important region with attractive growth characteristics. This combination fits perfectly with our strategy to enter high growth markets in which we can apply our global expertise and generate strong returns. Also, this acquisition will allow us to bring to South Africa our significant experience in connecting small farmers with Walmart’s global supply chain, boosting farmer income as well has helping them improve the quality of their produce. We hope to help South African suppliers grow their businesses, become more efficient, environmentally friendly and ultimately more competitive."

Andy Bond, Executive Vice President with responsibility for Walmart’s operations in the region, including the United Kingdom and Africa, commented: "The due diligence effort we have conducted over the last eight weeks has underlined our confidence that this is a compelling combination that will create significant value for both companies, and we look forward to participating in the regulatory process to complete this acquisition. Importantly, we believe bringing Massmart and Walmart together will offer substantial benefits to Massmart customers, employees and shareholders, and will unlock new growth opportunities ahead."

Massmart chains are focus on high-volume, low-margin, low-cost distribution of mainly branded consumer goods for cash

Bond continued, "In addition to supporting Massmart’s growth strategy, we believe Walmart can drive meaningful value creation through enhanced buying efficiencies, expanded distribution and logistics capabilities and sharing of global best practices in retail formats and information technologies."

Massmart Chairman and founder Mark Lamberti

Commenting on the offer, Massmart Chairman and founder Mark Lamberti said: “Walmart’s offer is an affirmation of Massmart’s strategic and operating progress in pursuit of mass market retail excellence in South Africa and the sub continent over many years. The offer is very fair to existing shareholders who can both realise some value and obtain the opportunity to co-invest with Walmart. We are confident that the proposed transaction will enhance the Group’s prospects and growth, with obvious benefits to current and prospective stakeholders. Together these factors made it easy for the Board to make a unanimous recommendation of the offer to shareholders.”

The offer remains subject to acceptance by Massmart’s shareholders, as well as certain customary conditions and relevant regulatory approvals in South Africa. The offer documents are expected to be mailed to Massmart’s shareholders by December 9, 2010.

About Wal-Mart Stores Inc.

Wal-Mart Stores Inc. serves customers and members more than 200 million times per week at 8,692 retail units under 59 different banners in 15 countries. With fiscal year 2010 sales of USD 405 billion, Walmart employs more than 2 million associates worldwide. A leader in sustainability, corporate philanthropy and employment opportunity, Walmart ranked first among retailers in Fortune Magazine’s 2010 Most Admired Companies survey.

Massmart share price graph and company's retail portfolio

About Massmart Holdings Limited

Massmart Holdings Limited is a managed portfolio of nine wholesale and retail chains, and one buying group, each focused on high-volume, low-margin, low-cost distribution of mainly branded consumer goods for cash. The group operates in 14 countries in sub-Saharan Africa through four divisions comprising 288 stores. Massmart’s wholesale and retail brands enjoy high recognition and include Makro, Game, Dion Wired, Builders Warehouse, Builders Express, Builders Trade Depot, CBW, Jumbo Cash and Carry and the Shield buying group.

Margaret E.L. Stacey
Editor Companies and Products
[email protected]
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