Bentonville, Ark. - Wal-Mart Stores Inc. has made a preliminary proposal to acquire South African consumer goods distributor Massmart Holdings Ltd.
Massmart, which is headquartered in Johannesburg, is one of the largest distributors of consumer goods in Africa and is said to be the continent's leading retailer of general merchandise, home improvement equipment and supplies. The 290-unit chain, located in 13 African countries, is also a major basic foods retailer within its regions. Massmart also manages eight wholesale and retail chains operating under a variety of different brand names.
Wal-Mart Stores, which currently operates more than 8,500 retail units under 55 different banners in 15 countries, said its proposal to Massmart is non-binding and, if successful, could lead to a cash offer for the acquisition of the South Africa-based retailer for ZAR148 per share.
The offer is subject to several conditions, including due diligence, and a period of reciprocal exclusivity granted by Massmart and Walmart. In accordance with the South African legal requirements, Massmart today filed a "cautionary announcement" indicating the terms of the contemplated offer.
"We are continuing to deploy our strategy to accelerate growth and improve returns in our international business and this region of the world fits with our focus on large, high growth markets," said Doug McMillon, Walmart International president and ceo. "This potential combination with a market leader will enable us to add value to an already successful business through investments in people and technology."
Added Andy Bond, evp with responsibility for Walmart's operations in the region, including the United Kingdom and Africa: "South Africa presents a compelling growth opportunity for Walmart and offers a platform for growth and expansion in other African countries. South Africa possesses attractive market dynamics, favorable demographic trends and a growing economy."