Competition tribunal approves Shoprite’s proposal to buy Massmart Stores

South African retailer Shoprite has received a go-ahead as it plans to buy Massmart but it comes with a lot of terms and conditions.

The grocery and household products outlet, Shoprite’s proposed plan was approved by the Competition Tribunal as it wants to acquire certain Massmart-owned supermarkets.

The transaction will also include wholesalers and liquor stores and it has come to the attention of BusienssTech Africa that Shoprite initially made an offer to buy 56 grocery stores from Cambridge Food and Rhino Cash and Carry and 43 adjacent liquor stores earlier this year.

Shoprite also planned to purchase 10 wholesale cash and carry stores, 2 wholesale liquor stores, Massfresh and Fruitspot. It made an offer of R1.36 billion to Massmart. The Competition Commission recommended that the Tribunal approve the deal in May.

The Tribunal announced on Sunday that after a three-day merger hearing and various information requests, it has approved the proposed transaction with certain conditions to address identified competition and public interest concerns, including a condition that Massmart divests from ten stores identified as “highly problematic”. 

“The Tribunal ultimately approved the proposed merger on the basis that the ten highly problematic stores must be divested by Massmart to a suitable purchaser(s) within a specified period from the Tribunal’s approval of the merger. The purchaser(s) must be an independent third party(ies) unrelated to Shoprite,” wrote the Tribunal in a statement.

Per a News24 report, the tribunal said the third parties must be small or medium-sized businesses or historically disadvantaged persons.

However, it said the b8idders must have the necessary financial resources to acquire those stores and proven technical expertise to develop them into viable and competitive businesses where they are situated.

Until those buyers are found, Massmart must preserve and maintain the economic and competitive edge of those stores by providing the necessary funding to keep them trading and extending any supply and lease arrangements they have with it.

The Tribunal has provided for the appointment of a Trustee to monitor Massmart’s compliance with this.

“Other conditions relate to employment. The Tribunal ordered that there should be no retrenchments resulting from the merger,” reports News24.

“All employees of the stores Shoprite is buying will move from Massmart to Shoprite on the same or better terms they enjoyed at their previous employer, including wages and benefits. In addition, Shoprite Group undertakes to create additional permanent employment opportunities at its local operations.

“The Shoprite Group will also establish and implement the Shoprite Employee Share Ownership Programme within 60 days of the merger, which will hold 40 million shares in the company at no cost to employees.  But employees must have been employed by the Shoprite Group for a minimum specified period to become part of that scheme.”