Walmart sweetens deal with fund offer

Johannesburg - Global retailer Walmart and its local acquisition target Massmart Holdings [JSE:MSM] on Monday offered to set up a R100m fund to help support local suppliers, and pledged to honour existing union contracts

There would be no retrenchments for at least two years after the deal is finalised, they said.

"(The merged entity) proposed a commitment to ensure that there are no retrenchments, based on the merged entity's operational requirements in South Africa, resulting from the merger for a period of two years from the effective date of the proposed transaction," they said.

A lawyer representing Walmart also told the Competition Tribunal it would honour all union deals for a period to be determined by the tribunal.

The offer was made in closing arguments to a hearing of the Competition Tribunal, which is examining Walmart's R16.5bn bid to acquire 51% of Massmart.

Earlier on Monday, the Competition Commission, which had earlier approved the tie-up, said conditions should be imposed on the deal, including that Massmart rehire 503 retrenched workers

The two said the offer was a bid to show "goodwill" and maintained there still was no need to impose conditions on the deal. They would, however, accept the committments as conditions.

Walmart International CEO Doug McMillon said it still believed that the merger would increase competition and be beneficial to SA.

"In an effort to increase the comfort of those involved, we feel that these proposed commitments demonstrate our good faith and wil lallow us to collectively serve customers in South Africa and help them save money and live a better life,” he said.

The supplier programme will be funded by a fixed amount of R100m to be contributed by the merged entity, and would report every year to the Competition Commission on its progress.

It will also start a programme to train local suppliers on how to do business with the merged entity and with Walmart globally.

Massmart CEO Grant Pattison said: "We anticipate that Walmart will enable Massmart to accelerate the implementation of our new fresh food offering which will require a network of reliable local suppliers; we are therefore likely to place priority on the development of local farmers.

"In this way the merger will assist in delivering the dual benefits of increasing competition amongst national food retailers whilst also growing the local producer base".