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Johannesburg - Walmart expects to complete the R16.5bn transaction to buy a 51% stake in Massmart Holdings [JSE:MSM] within weeks after getting the go-ahead from competition authorities, the US retailer's CEO Doug McMillon said on Tuesday.
"We will now move to close the transaction as soon as possible... we do look forward to closing... in a matter of a few weeks," he told a conference call following an announcement by the Competition Tribunal that the deal could go ahead with limited conditions proposed by Walmart and Massmart.
The decision will be seen as a major advance for Walmart, which had said it could walk away from the deal if the government imposed targets on using local suppliers.
The conditions include 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 (Saccawu) for three years post the merger.
Saccawu, however, said on Tuesday it may appeal the approval.
"We are meeting with our legal representatives to explore legal possibilities," Mike Abrahams, a spokesperson for Saccawu, told Reuters. The union could consider appealing to the Competition Appeals Court, Abrahams said, a move that could further delay the deal.
Saccawu is the largest union among Massmart employees.
"We look forward to creating new jobs in South Africa, support for the development of South African exports, and providing previously under-served customers and communities with better prices and increased access to the products they want and need," McMillon said.
The merged entity would open new stores, create thousands of new union jobs, and anticipated growing its food business by over 50% in five years, he added.
Walmart said it had 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.
Massmart CEO Grant Pattison said the signal sent by the tribunal embraced a "mainstream interpretation" of competition law, and had "to some extent rejected the radical interpretation".
"I think it sends a very positive signal to the entire global investment community," he told the conference call.
African expansion
Walmart, which operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico, wanted a share of Massmart to get a stake in emerging African markets.
McMillon said Walmart saw the deal as involving a region, not particular countries.
"Clearly South Africa alone is an attractive market, but we are clearly interested in sub-Saharan Africa ... we don't start out with a predisposition to growing in one country over another... we think of this as a region."
Pattison added they were "trying to figure out a way to get into" new markets such as the Democratic Republic of Congo, Senegal and Angola. The company also saw promise in Nigeria.
The SA SMME (small, medium and micro enterprises) Forum, which took part in the tribunal hearings, said it "notes and welcomes the ruling".
"To the extent that specific conditions pertaining to the development of local enterprises have been made, the forum now wishes to pledge its support in this regard," its president Tebogo Khaas said in a statement.
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.
Reasons for the tribunal's decision would be released on or before June 29.
The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.
"We will now move to close the transaction as soon as possible... we do look forward to closing... in a matter of a few weeks," he told a conference call following an announcement by the Competition Tribunal that the deal could go ahead with limited conditions proposed by Walmart and Massmart.
The decision will be seen as a major advance for Walmart, which had said it could walk away from the deal if the government imposed targets on using local suppliers.
The conditions include 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 (Saccawu) for three years post the merger.
Saccawu, however, said on Tuesday it may appeal the approval.
"We are meeting with our legal representatives to explore legal possibilities," Mike Abrahams, a spokesperson for Saccawu, told Reuters. The union could consider appealing to the Competition Appeals Court, Abrahams said, a move that could further delay the deal.
Saccawu is the largest union among Massmart employees.
"We look forward to creating new jobs in South Africa, support for the development of South African exports, and providing previously under-served customers and communities with better prices and increased access to the products they want and need," McMillon said.
The merged entity would open new stores, create thousands of new union jobs, and anticipated growing its food business by over 50% in five years, he added.
Walmart said it had 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.
Massmart CEO Grant Pattison said the signal sent by the tribunal embraced a "mainstream interpretation" of competition law, and had "to some extent rejected the radical interpretation".
"I think it sends a very positive signal to the entire global investment community," he told the conference call.
African expansion
Walmart, which operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico, wanted a share of Massmart to get a stake in emerging African markets.
McMillon said Walmart saw the deal as involving a region, not particular countries.
"Clearly South Africa alone is an attractive market, but we are clearly interested in sub-Saharan Africa ... we don't start out with a predisposition to growing in one country over another... we think of this as a region."
Pattison added they were "trying to figure out a way to get into" new markets such as the Democratic Republic of Congo, Senegal and Angola. The company also saw promise in Nigeria.
The SA SMME (small, medium and micro enterprises) Forum, which took part in the tribunal hearings, said it "notes and welcomes the ruling".
"To the extent that specific conditions pertaining to the development of local enterprises have been made, the forum now wishes to pledge its support in this regard," its president Tebogo Khaas said in a statement.
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.
Reasons for the tribunal's decision would be released on or before June 29.
The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.
