UPDATE: Massmart Shareholders Approve Takeover By Wal-Mart
January 17 2011 - 11:12AM
Dow Jones News
Shareholders in South Massmart Holdings Ltd. (MSM.JO) have
Monday agreed to sell a controlling stake in the African retailer
to Wal-Mart Stores Inc. (WMT) for $2.39 billion.
The proposed acquisition marks the Bentonville, Ark.-based
retail giant first foray into the growing sub-Saharan African
market. However, the deal faces opposition from labor unions
concerned at what the possible "Walmartization" of the local retail
industry.
Shareholders voted almost 98% in favor of a deal to sell a 51%
stake in Massmart to Wal-Mart at 148 rand ($21.36) a share, the
company said. The transaction needed the support of at least 75% of
Massmart shareholders.
"This is an important milestone and we now await the decision
from the competition authorities," said Grant Pattison, chief
executive of Massmart, adding the Competition Commission is
expected to make its recommendation this month, followed by a
Competition Tribunal hearing.
Massmart operates several wholesale and retail chains, including
Game general-merchandise stores, Builders Warehouse for
construction and Makro warehouse-club stores. The bulk of the
company's 288 stores are in South Africa, although Massmart also
operates in 13 other sub-Saharan countries.
The South African Commercial, Catering and Allied Workers Union,
which held a press conference outside the venue where Massmart
shareholders voted, said it will challenge the planned takeover
through competition law and "in the political realm." It said it
would also "directly educate" its membership about the implications
for workers, accusing Wal-Mart of being anti-union.
"Despite the advent of democracy in 1994, South Africa remains
one of the most inequitable societies in the world, said Tyotyo
James, deputy-president of Cosatu. "The acquisition of 51% of
Massmart by Walmart will cut out even more local ownership of one
of the major retail players in the country."
Massmart said it and Wal-Mart have provided labor unions with
numerous assurances the companies will continue to honor all
existing union agreements and South African labor law if the deal
goes ahead. It said Saccawu represents 41% of its employees.
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848;
robb.stewart@dowjones.com