Walmart Makes R6.4bn Offer to Buy Out Shareholders of Massmart, Plans to Delist the Retailer on Stock Exchange

• Walmart has offered to buy out minority shareholders of South African retailer Massmart in a R6.4 billion deal
• The massive US retailer also plans to delist Massmart, which owns Game, Makro and Builders Warehouse, on the Johannesburg Stock Exchange
• The US retail giant claims that the potential deal will help the company support the struggling retailer more effectively

JOHANNESBURG – Walmart has offered to buy out shareholders of South African retail conglomerate Massmart.

The R6.4 billion move will mean that the American retail giant will own the entire company by securing the remaining 49% of ownership.

Fin24 reported the shareholders would be given R62 per share, which is 53% higher than Massmart’s closing share price on Friday, 26 August.

Walmart acquired control of Massmart in 2010, however, due to a bad economy and increased competition, the investment's value has now fallen by 80%.

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Reuters reported that the US retailer plans to sell or close some of its non-core assets as part of its turnaround plan. The company admits the move will negatively affect Massmart's earnings and loss over the short term, but it's essential to the long-term plan.

Massmart has established an impartial board to examine the conditions of the offer. PricewaterhouseCoopers (PwC) provides guidance to the independent board. The independent board has already determined that the terms of the offer are "fair and reasonable" based on a preliminary report and will advise the board to accept the offer.

The American retailer says the offer will allow them to continue offering support to the struggling retailer and give eligible Massmart shareholders the chance to profit from value immediately.

Some South Africans aren't happy with the announcement with fears that the change in ownership will result in job losses.

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@gpreller said:

“Another listing gone from the JSE. Next will be the announcement of retrenchments and job losses.”

@UniqueSAProblem added:

“Not good news.”

Steinhoff rocked by another scandal after ex-CFO slapped with fine

Briefly News previously reported that the Johannesburg Stock Exchange has slapped former Steinhoff chief financial officer Ben La Grange with a R2 million fine for breaching its rules.

He has also been barred from holding a directorship position at any listed company for a decade for failing to fulfil his duties.

A News24 report states that these sanctions stem from a fake handwritten invoice that falsely inflated the company's income by more than R376 million.

Source: Briefly News