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Delay raises doubts

Johannesburg - A hearing by South Africa's competition watchdog into Walmart's $2.3bn (R16.5bn) bid for Massmart Holdings [JSE:MSM] has been postponed, raising doubts about the deal.

The delay came after the government and unions asked for more time to submit additional information.

Here are some questions and answers about what could happen next:

Will Walmart walk away?

The deal gives the giant US retailer a presence in poor but fast-growing Africa.

"Massmart remains a compelling investment opportunity," the US-based company said on Wednesday.

But if regulators attach conditions that reduce Walmart's competitiveness, it could walk way.

Unions and the government want guarantees over job security for Massmart workers and for Walmart to commit to use mostly domestic suppliers.

"Everything depends on what conditions are imposed, if any, and if those conditions can be tolerated," said Nedcor Securities analyst Syd Vianello.

"If the (Competition) Tribunal is going to impose totally unrealistic conditions, then it is a reasonable expectation that the parties may decide that it is not worth the trouble."

Have the unions gained anything?

Unions, led by the South African Commercial, Catering and Allied Workers Union (Saccawu), have opposed the deal from the start.

Saccawu has threated the "mother of all boycotts" against South Africa's third-largest retailer.

Saccawu said it was ready for this week's hearings and the delay would not necessarily help.

"The postponement does give us more time to look at what might have been the loopholes, but it doesn't necessarily enhance our chances," said Lucas Ramatlhodi, coordinator and secretary for the union.

What could happen to the rand?

The R16.5bn, worth $2.39bn at current exchange rates, that Walmart is paying for the Massmart stake has not been brought into the country, but some currency dealers have already factored in the inflows.

The rand is likely to weaken, as some market players already made bets based on the inflows.

Conversely, the currecy, which gained about 1% in the week the deal was announced in September, could strengthen if the deal is approved as investors look foward to inflows.

Foreign inflows were the main driver of rand gains in the past two years.
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