Wal-Mart Expands its Retail Empire
Wal-Mart Stores Inc. has offered to acquire 51 percent of the shares of Massmart Holdings Limited, 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.
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.”
Andy Bond, executive vice president with responsibility for Walmart's operations in the region, including the United Kingdom and Africa, said: “We believe bringing Massmart and Walmart together will offer substantial benefits to Massmart customers, employees and shareholders, and will unlock new growth opportunities ahead."
He 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."
In a statement, Walmart said it fully understands and is supportive of the constructive position that Massmart has taken on Broad Based Black Economic Empowerment (BEE), and expects to broaden and accelerate these efforts. Walmart also intends to work closely with local partners to grow skills and foster socio-economic development in the region, and by so doing, to be a corporate and retail role model. Further, Walmart will respect and honor all pre-existing contracts with organized labor bodies.
Insofar, the offer has been unanimously recommended by the Massmart Board of Directors, but 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.