United States-based retailer Walmart has just wrapped up its mission to acquire 100% ownership of Massmart.
Walmart’s move comes after the company bought a 51% stake in Massmart more than 10 years ago.
Media reports suggest that Walmart pronounced the intention to over Massmart back in August as also reported on by BusinessTech Africa.
The deal has forced Walmart to part ways with R6.4 billion, saying that the deal would give Massmart access to the financial and operational support it needs to meet its growth objectives.
MoneyWeb published that this move follows after years of declining profitability, especially in its Game stores.
By August 2022, when the takeover bid was made public, Massmart’s share price had shaved off close to 80% of its value since Walmart’s initial stake.
Looking at ratings as of this week, Massmart has been delisted from the Johannesburg Stock Exchange, as per its announcement earlier.
“Walmart is excited to be able to build on the long-term commitment we have already made to our South African customers, associates, and partners,” Walmart International CEO Mckenna said.
“Most importantly, this transaction represents a positive vote of confidence in Massmart and in South Africa, which will allow us to continue to contribute meaningfully to future economic growth in the region.”
When Walmart, the largest retailer in the globe first acquired 51% of Massmart in 2011, it viewed South Africa as a high-growth market and hoped to grow its presence in the country as well as spread its wings into the African continent.
However, its plans didn’t bear the fruits the company had hoped for, despite implementing various strategic interventions, including the appointment of a Walmart executive from the US, Mitchell Slape, whose tenure as Massmart’s CEO lasted three years.
Meanwhile, South African banking company Standard Bank, which acted as financial advisor and transaction sponsor to Massmart, said the transaction would go a long way towards restoring investor confidence in the country.
“Walmart’s expertise and support will unlock significant growth opportunities for Massmart, which in turn have the potential to create jobs and develop local economies across the region,” said Michael Dempster, an executive for advisory at Standard Bank.