SOUTH AFRICA: Competition authorities give U.S. retail giant Wal-Mart the go-ahead to take a controlling stake in local operator Massmart

Record ID: 453039

  • Title: SOUTH AFRICA: Competition authorities give U.S. retail giant Wal-Mart the go-ahead to take a controlling stake in local operator Massmart
  • Date: 1st June 2011
  • Summary: JOHANNESBURG, SOUTH AFRICA (MAY 31, 2011) (REUTERS) EXTERIOR OF MAKRO STORE MORE OF EXTERIORS VARIOUS OF STAFF AND SHOPPERS INSIDE MAKRO STORE JOURNALIST SPEAKING TO COMPETITION COMMISSION PANEL MEMBER, OUPA BODIBE (SOUNDBITE) (English) COMPETITION COMMISSION MANAGER FOR ADVOCACY AND STAKEHOLDER RELATIONS, OUPA BODIBE, SAYING: "The Competition Tribunal has today approved the merger, with conditions, and the merging parties will have to put aside 100 million rand for the development of small independent suppliers, there will be no retrenchment for two years as a result of this transaction and that the workers that were retrenched, 503 workers will be given first preference should opportunities emerge and that they must recognize union agreements for the next three years." EXTERIOR OF BUILDERS WAREHOUSE VARIOUS OF AISLES/PEOPLE SHOPPING (SOUNDBITE) (English) ADRIAN SEVILLE, CHIEF INVESTMENT OFFICER AT CANNON ASSET MANAGERS, SAYING: "For South Africa to achieve the type of economic growth that is mooted -- 6.7 percent -- it's essential that the country is open to business and had today's announcement brought with it strict onerous restrictions then that would have sent a message about South Africa being closed for business, and the implication, I think, of today's announcement is a long way away from that. So, as I suggest, it's not without some downside or restriction; I think it's a level headed result." EXTERIOR OF GAME STORE VARIOUS OF STAFF AND PEOPLE SHOPPING MORE OF EXTERIOR OF MAKRO STORE
  • Embargoed: 16th June 2011 13:00
  • Keywords:
  • Location: South Africa, South Africa
  • Country: South Africa
  • Topics: Industry,Domestic Politics
  • Reuters ID: LVAAZ956D7JXBUIVUIPTNLGDKK17
  • Story Text: South Africa approved Wal-Mart's $2.4 billion bid for local retailer Massmart without conditions that could have jeopardized the deal, opening the door for the U.S. giant to expand into fast-growing Africa.
    South Africa's Competition Tribunal said in a statement on Tuesday (May 31) it had approved the deal, with the stipulation that Wal-Mart must not cut jobs for two years and work to develop local suppliers.
    "The Competition Tribunal has today approved the merger, with conditions, and the merging parties will have to put aside 100 million rand (14.6 million USD) for the development of small independent suppliers, there will be no retrenchment for two years as a result of this transaction and that the workers that were retrenched, 503 workers will be given first preference should opportunities emerge and that they must recognize union agreements for the next three years," said Oupa Bodibe, from the Competition Commission.
    The decision is likely to be seen as a major advance for the world's largest retailer, which had said it could walk away from the deal if targets were put on local procurement. The decision could trigger industrial action after South African unions threatened the "mother of all boycotts" if the tie-up was approved.
    The deal has been seen as a test case for major foreign investment in South Africa. Home to the continent's deepest capital markets, South Africa is also a country where unions hold enormous political influence.
    "For South Africa to achieve the type of economic growth that is mooted -- 6.7 percent -- it's essential that the country is open to business and had today's announcement brought with it strict onerous restrictions then that would have sent a message about South Africa being closed for business, and the implication, I think, of today's announcement is a long way away from that. So, as I suggest, it's not without some downside or restriction; I think it's a level headed result," said Adrian Seville, an analyst from Cannon Asset Managers.
    Amongst other conditions, Massmart must also "give preference" to re-employing some 500 workers fired in June 2010.
    Three government departments and the unions had lined up against the deal, asking the tribunal to impose targets on local procurement and a freeze on job cuts.
    The government and unions are concerned about Wal-Mart's global supply network which, they have said, could lead to a flood of cheap imports, sparking job losses and squeeze local suppliers.
    Shares of Massmart jumped after the announcement but were down 0.64 percent at 1219 GMT.
    The Massmart group of stores includes Makro, Builders Warehouse and Game.
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