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State defends stance on Walmart deal

Cape Town - The Walmart-Massmart deal is being dealt with on its own merits and does not indicate a general government stance on foreign investments, cabinet spokesperson Jimmy Manyi said on Thursday.

Briefing the media following the executive's regular Wednesday meeting, he said the cabinet had noted the Competition Tribunal's ruling on the matter.

The cabinet was in full support of the stewardship provided by the ministers of economic development, trade and industry, and agriculture, forestry and fisheries as they assessed the ruling.

"Furthermore, cabinet wants to make it very clear that this specific matter is being dealt with on its own merits," he said.

"The position government is pursuing on this matter is issue-specific and does not constitute a general government posture on foreign investments.

"Government will continue to act in the public interest and will always conduct itself within the parameters provided by the law and the constitution of this country," Manyi said.

Last week, the United States retailer's CEO Doug McMillon said Walmart expected to complete the R16.5bn transaction to buy a 51%  stake in Massmart Holdings [JSE:MSM] within weeks, after getting the go-ahead from the competition authorities.

The Competition Tribunal ruled that the deal could go ahead with conditions proposed by Walmart and Massmart.

The conditions included setting up a R100m supplier development fund, no merger-related retrenchments for two years, and the continued recognition of the SA Commercial Catering and Allied Workers' Union for three years post the merger.

McMillon said the merged entity would open new stores and create thousands of new union jobs, and anticipated growing its food business by over 50% in five years.

Walmart said it was committed to sourcing the vast majority of fresh food products from South Africa, and was planning a "substantial" programme to train and develop thousands of local farmers with a specific focus on black economic empowerment.

The deal was seen as a test case for South Africa's competition authorities, particularly as the merger raised no competition concerns but did concern the public interest, the tribunal said in its finding.

The government and unions were concerned the deal would lead to job losses and hurt local procurement.

However, the tribunal said conditions proposed by Walmart and Massmart to counteract these were sufficient, and warned they would be enforceable.

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