Wal-Mart Stores, Inc, Monaday issued a non-binding proposal to South African wholesaler Massmart which could lead to Walmart making a cash offer to acquire the entire issued share capital of the Company for a price of ZAR148 per share.
The offer equates to more than $4 billion (R 28.9 billion) for South Africa’s third-largest listed store group by value. Massmart own chains such as Game, Makro, Dion Wierd, Jumbo, Shield and Builders Warehouse.
The offer values Massmart at about 10% more than its closing share price on Friday (23 September), and comes after months of speculation that Walmart has been considering making a bid for one of Africa’s large retail groups.
Massmart issued a cautionary announcement to shareholders today saying that the Proposed Offer is subject to a number of pre-conditions including, inter alia, due diligence, which will commence immediately. In order to satisfy these pre-conditions, a period of exclusivity has been granted by Massmart to Walmart. A reciprocal period of exclusivity has been granted by Walmart to Massmart.
Shareholders are advised that there can be no certainty that these discussions will lead to a formal offer being made.
Grant Pattison, CEO of Massmart, said: “Walmart’s interest represents a vote of confidence in South Africa, as well as in Massmart and all its employees.”
By market capitalisation, Massmart it is South Africa’s third-biggest listed store group after Shoprite Holdings and clothing retailer Truworths.
Walmart is the world’s largest retail company, and whilst it is largely known for its US operations, it has operations in 15 countries. Walmart employs more than 2 million people around the world and achieved sales of $405 billion in fiscal 2010.
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