Fin24

Walmart deal approved with terms

2011-05-31 14:17

Johannesburg - The Competition Tribunal approved Walmart's R16.5bn ($2.4bn) bid for Massmart Holdings [JSE:MSM] on Tuesday, saying the retailer must not fire workers for two years.

The conditions imposed on the deal - including a programme for developing local suppliers - will likely be seen as a win for the world’s largest retailer, which said it would walk away from the deal if targets were put on local procurement.

"Today the Competition Tribunal approved the merger between Walmart and Massmart subject to certain conditions," it said in a statement.

Full reasons for the tribunal's decision will be made public within 20 working days.

In January, shareholders voted to accept Walmart's bid to acquire 51% of Massmart for R148 a share. The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.

Walmart operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico. It wants to buy the stake in Massmart to obtain a stake in emerging African markets.

The deal was seen as a test case for major foreign investment in South Africa. Home to the continent’s deepest capital markets, South Africa is also a country where unions hold enormous political influence.

Three government departments and the unions had lined up against the deal, asking the tribunal to impose targets on local procurement and a freeze on job cuts.

The government and unions are concerned about Walmart's global supply network which, they say, could lead to a flood of cheap imports, sparking job losses and squeezing local suppliers.

Massmart shares were up 1.7% at R142.50 immediately following the announcement.

Comments
  • Cobus - 2011-05-31 14:28

    Hip-hip hoorah!! This can be seen as giving the unions and government a bloodnose for only thinking about the workers and not the general public and consumers. We need a company like Walmart to give consumers a wider selection of products at more competitive prices.

      LemonParty - 2011-05-31 14:48

      "saying the retailer must not fire workers for two years. " - basically pay them to sit and do varkall for 2 years, then we see profits go through the roof. All in the name of keeping the governments promise of reducing unemployment.

      george - 2011-05-31 15:12

      Cobus you are shortsighted. Any fired staff will be breaking into your homes at night and commit rape, murder for a cellphone to sell in order to buy food. Workers welfare is linked to general public safety and satisfaction. All the cheap goods you will get from Wallmart at the expense of jobs will be paid by our blood. Dont be shortsighted. More crime leads to disinvestment and suffering to the general public.

      Peacock - 2011-05-31 15:43

      I agree with Cobus. I work for a supplier and have no sympathy for the Unions. They need their tails curtailed to be more efficient in driving growth through partnerships and not through dictatorial practices.

      Dougalan - 2011-05-31 15:58

      Unions have far too much power in SA, which has led to the closure of many businesses over the years and tens of thousands of workers losing their jobs, while union bosses remain filthy rich. Unions have lost power in other countries; eventually the same must happen here as people wake up to the fact that unions are now the exploiters.

      Lawence - 2011-05-31 16:07

      LemonParty. This is not an unusual condition when one company buys another. George. Unproductive employment is not good for anyone, and certainly not good for the economy. Take the Petrol Pump Attendants. Say we have 10,000 garages, and 3 shifts @ 5 attendants each. That’s 150,000 people not ‘gainfully employed. Yes they earn money, yes they pump petrol. But in terms of the countries productivity, in terms of output, creating wealth, they are ‘baggage’. South Africa needs to be globally competitive and that means inputs (labour) vs outputs (product). If each one produced one T-Shirt a year, we would have 150,000 T-Shirts we do not have now. Walmart and its drive to reduce costs and labour required, will be a wake up to other retailers. Yes, there will be pain when staff are cut, but SA needs to find opportunities and growth in other areas, rather than defending non-productive jobs.

      Goose - 2011-05-31 16:17

      @George It is actually employees that steal the most as a matter of fact. The rampant corruption, fraud, nepotism etc are all committed by employed people.

      jontheb - 2011-05-31 19:29

      Goodness - what a bunch of capitalist numbnuts! Walmart is made in China (or wherever it's cheapest). That will mean cheaper prices and stiff competition for pick n pay, shoprite and co. However, we could potentially kill our large agricultural industry (our agricultural products ie. food are still vastly cheaper than the rest of the world!) Local is lekker. We should look to protect our workers, not exploit them. What SA actually needs is strict controls and heavy taxes on property speculators who are driving our property prices through the roof and driving young professionals to other greener pastures. SA needs to focus on building its middle class, which means increasing social mobility (allowing workers to send their children to top tertiary institutions and thus move them from working to middle class)and not limiting it. Jislaaik people - don't you care about the future of our country? You reap what you sow...

      Espresso - 2011-06-01 10:04

      @Jontheb: How much of our agricultural produce is sold by the likes of Deon Wired, Makro, Builders Warehouse and Game, the main chains of Massmart? Two years of no retrenchment of employees at Massmart stores is not a bad deal. The government and unions want to take legal action against this deal, but just how much have those cowboys done for development of local suppliers in the past. Another example of the government wishing to impose its own obligations on the private sector.

  • tiger - 2011-05-31 14:32

    I am glad

  • Danny Baromen - 2011-05-31 14:33

    Finally the courts ruled in favor of progress!!!

  • phorane.thokoane - 2011-05-31 14:34

    Now let's see how the poor benefit from this deal...... I m positive that they will benefit from lower prices and increased access to products........

      Nasdaq7 - 2011-05-31 15:17

      Poor people in the rest of Africa will also benefit immensely. They will have access to the best products at the lowest prices. Imagine what they can do with affordable high quality computers, printers, beds, furniture, fridges, microwaves, televisions, dvd players. The big winner in this is actually the continent of Africa. Its people will become highly productive because they can get high quality goods cheaply.

      Sizwe - 2011-06-01 09:44

      The poor will most likely get poorer as local suppliers would lose out to cheaper imports from China. Then the local suppliers will have to Divest or reduce staff, either way, more unemployed and poor people and one more entrepreneur ruined by short-sited policy. We need to protect the local economy from external threats, and Walmart epitomises that threat, the World is replete with examples of Walmart flooding local markets with cheap imports. For once lets forget the consumer and focus on the SMME's that are suppliers and service providers to major retailers and the adverse effects the likelyhood of this deal will have on them.

  • onegreenparker - 2011-05-31 14:36

    Fire or retrench? Two very different things.

      tommo - 2011-05-31 15:12

      how so?

      news24_Editor - 2011-05-31 17:43

      @tommo: Google it.

      JM - 2011-05-31 19:20

      Fired = no severance package, retrench = do get a package aka money...

      DW - 2011-06-01 10:18

      @ tommo - you fire someone who has done something wrong (after a process of disciplinary hearings etc). You retrench someone when your profits will be affected if you keep them on - no wrongdoing on the part of the employee. Very, very different concepts.

  • michaelph - 2011-05-31 14:37

    fantastic news

  • Wezz - 2011-05-31 14:38

    Yay! In two years time one will actually be able to get decent service at Game stores.

      tam - 2011-05-31 15:12

      Amen to that!!!

      Lim The Black - 2011-06-01 11:28

      from who exactly?

  • PSquare - 2011-05-31 14:48

    Walmart will easily create a monopoly in the retail space. Tell me what incentive is there for them to lower prices when they have little to no competition locally?

      jock van wyk - 2011-05-31 15:10

      wake up and smell the roses they will be the competition

      GT - 2011-05-31 15:14

      very good point. They push prices as far done as they want to, not can

      shmangle - 2011-05-31 15:22

      As long as they're cheaper than our current retailers, that's progress. That puts pressure on other retailers to drop prices, which means becoming more efficient, in order to compete. Which in turns puts pressure on Walmart to stay ahead of them... etc.

      Freddie - 2011-05-31 15:23

      If you look at Wallmarts record in other countries, you have nothing to fear!

      Benny66 - 2011-05-31 17:10

      I somehow think we'll see the Dions; Game; Builderswarehouse etc be absorbed into the Wallmart Brand in time to come. Anyone see the program aired on CTV (Cape TV) showing how Wallmart, as it opened up new stores in smaller towns, put other shops in the area out of business; How they flooded the market with cheap quality imports?; How they took advantage/misstreated their staff etc. Those who reckon this is a good move should read up on/listen to the Wallmart history in the USA. Some good may come of this but if their track record in the US is anything to go by there will be many business folk/employees whose noses will be put out of joint at some stage. @ Freddie. On what do you base your observation?

  • stofsuier - 2011-05-31 14:49

    I will be able to buy some decent jeans instead of the chinese rubbish that they sell at Edgars.

      justjulles - 2011-05-31 15:20

      Sorry Stofsuier, I lived in the US for 3 years.. and believe me Walmart specialises in products made in China... even the jeans :D

  • bosegoos - 2011-05-31 14:59

    Wonderful news. The consumer can only benefit. It is also good that Cosatu & Co did not get it their way.

  • The Wonderer - 2011-05-31 15:01

    I they knew the history of South African's African workers, they'll know that they "toy-toy" over fokkol, watch that price per share go waaaaay down...

  • Greg - 2011-05-31 15:02

    Fire the low performing staff and obviously the ones involved in criminality.

  • Greg - 2011-05-31 15:04

    Fire the low performing staff and obviously the ones involved in criminality.

  • Clint - 2011-05-31 15:08

    Julius Malema is there first customer

  • Budweiser - 2011-05-31 15:10

    Welcome Wallmart!!!! At last!

  • Budweiser - 2011-05-31 15:11

    Welcome Wallmart! This is a good move!

  • Budweiser - 2011-05-31 15:12

    Good move! Welcome Walmart!

  • tommo - 2011-05-31 15:14

    Bring on the cheaper goods! A win for all us Saffas who are concerned about rising costs of living

  • tommo - 2011-05-31 15:15

    Bring on the cheaper goods! A win for all us Saffas who are concerned about rising costs of living

  • george - 2011-05-31 15:16

    Cobus and Lemon Party dont be foolish and shortsighted.Cobus you are shortsighted. Any fired staff will be breaking into your homes at night and commit rape, murder for a cellphone to sell in order to buy food. Workers welfare is linked to general public safety and satisfaction. All the cheap goods you will get from Wallmart at the expense of jobs will be paid by our blood. Dont be shortsighted. More crime leads to disinvestment and suffering to the general public.

      Tunkisi - 2011-05-31 21:30

      @george, well said

  • Kevin - 2011-05-31 15:24

    You do not want Walmart. Read up about them .

  • justjulles - 2011-05-31 15:26

    @ stofsuier, sorry to dissapoint you ...Having lived in the USA for 3 years, back in SA for almost 6 months now, but WALMART along with most of the American companies specialise in products from China.. even the Jeans.. :D

  • justjulles - 2011-05-31 15:33

    @ stofsuier, sorry to dissapoint you ...Having lived in the USA for 3 years, back in SA for almost 6 months now, but WALMART along with most of the American companies specialise in products from China.. even the Jeans.. :D

  • Lukas Oelofse - 2011-05-31 15:45

    where can i buy shares

  • Mmoledi - 2011-05-31 15:53

    If that purchase is for the best of the country and citizens then it is fine but if workers will suffer after that, then that will be a sour deal,even that clause saying workers must not be fired or reduced within two years is not good at all as that will happen after two years people will start losing their jobs so that could have been at least five years so that workers prepare themselves while there is plenty of time to get out of debt so after two years this means people will start losing their jobs, again they must buy or make use of our local manufactured goods because if not then our economy will suffer while where they will be getting goods they will sell in our country their economy will be good so local goods should be 70% used, then to all owners of massmart must stop being greedy and think about the country first and its people,selling shares that will at the end cause the country is pathetic.

      Rustique - 2011-05-31 17:55

      You must be from the Union/Cosatu camp as this drivvel is uninteligable.

  • Liberated - 2011-05-31 15:55

    as usual, we celebrate takeover of our companies by foreigners. What disgusts me is there is nothing spectacular about retail business - its just buying and selling, no value is created. Why do we as South Africans need a foreign company to come in and invest in industries that can easily be run by ourselves. What we need is folks who come and invest in the manufacturing and resource industries - not in shops. For goodness sake, who can't go around the world to source cheap products. And what makes okes sure Walmart will make the goods cheaper. This deal was just about Massmart shareholders making some serious monies.

  • Canadian DB - 2011-05-31 17:03

    A sad day for SA, Walmart is very preditory, they target and destroy local economy. Local governments in the US and Canada are try to block there expantion. They will not provide local products, but import cheap Chinses crap at such low prices that quality local products close. Every region they open, local business suffer and close then they close the regional Walmarts for large central one. So you now have to drive for hrs to do your shopping. Its a sad day...

  • Bill - 2011-05-31 18:16

    Now, maybe Game stores will have less racialist cashiers and maybe ones that might at least say hello and goodbye to the customers and maybe even see a smile from time to time in the future. And Yippeee…Game stores might even now have barcodes in their right places on the shelves too. And maybe, just maybe, with a bit of luck, we might even see at least one white staff member in the store!

  • Hasan X - 2011-05-31 18:46

    Lets all try and hope for the best. Maybe South Africa's manufacturers and other retailors benefit from this.

  • abrham - 2011-05-31 20:10

    when is barrack obama visiting

  • nem - 2011-05-31 20:34

    I wonder if Walmart will have to fall under the BEE law ???

  • Siboniso - 2011-06-01 08:41

    My view is, in the short term, we as consumers will benefit a lot, but in long term, we might suffer, the US is gonna be in control of our industry and make decisions for us, when they go down, we also go down, no doughs about that. So im not to sure about this.

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