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Pretoria - The government could jeopardise Walmart's $2.4bn bid for retailer Massmart Holdings [JSE:MSM] if it demands local procurement targets, the chief executive of the South African retailer said on Tuesday.
Walmart is in the middle of a R16.5bn bid to take 51% of Massmart, a deal that has pitted the US retail giant with unions and the South African government.
The government has said it is concerned about potential job losses and the squeezing of local suppliers if the acquisition goes through.
Massmart CEO Grant Pattison told a Competition Tribunal hearing that puttting conditions for local procurement on Massmart might put the deal in jeopardy.
"If Massmart-Walmart tried, or was forced, to do this alone, the likely outcome is that the merged entity will be forced to shed jobs as its competitors gain market share at its expense," he said.
Currently, Massmart sources about 60% of its products from South African manufacturers and Pattison said the company would still continue to use local suppliers.
"Local procurement is being, and will continue to be, pursued by Massmart and Walmart because it makes commercial sense to do," he said.
According to a study commissioned by the economic development and agriculture departments, a 1% shift from domestic to overseas suppliers by Massmart could cost the country 4 000 jobs. Trade and Industry Minister Rob Davies South said last week he wanted "concrete commitments" from Walmart not to cut jobs.
Walmart, the world's biggest retailer, is aiming to make its largest overseas acquisition since it bought British supermarket chain Asda in 1999. Some trade unions have threatened to strike against the US firm if the acquisition goes through.
Walmart is in the middle of a R16.5bn bid to take 51% of Massmart, a deal that has pitted the US retail giant with unions and the South African government.
The government has said it is concerned about potential job losses and the squeezing of local suppliers if the acquisition goes through.
Massmart CEO Grant Pattison told a Competition Tribunal hearing that puttting conditions for local procurement on Massmart might put the deal in jeopardy.
"If Massmart-Walmart tried, or was forced, to do this alone, the likely outcome is that the merged entity will be forced to shed jobs as its competitors gain market share at its expense," he said.
Currently, Massmart sources about 60% of its products from South African manufacturers and Pattison said the company would still continue to use local suppliers.
"Local procurement is being, and will continue to be, pursued by Massmart and Walmart because it makes commercial sense to do," he said.
According to a study commissioned by the economic development and agriculture departments, a 1% shift from domestic to overseas suppliers by Massmart could cost the country 4 000 jobs. Trade and Industry Minister Rob Davies South said last week he wanted "concrete commitments" from Walmart not to cut jobs.
Walmart, the world's biggest retailer, is aiming to make its largest overseas acquisition since it bought British supermarket chain Asda in 1999. Some trade unions have threatened to strike against the US firm if the acquisition goes through.
