US listed-firm, Walmart, has concluded a R6.4bn transaction to secure full ownership of Massmart.
The deal provides Massmart – which owns iconic local brands like Game, Makro, and Builder’s Warehouse – with the financial and operational support to reach its growth objectives. It is also an overwhelmingly positive vote of confidence in South Africa by the world’s leading retail group.
Standard Bank Group acted as the sole financial advisor and transaction sponsor for Massmart, which sold its 47.6% equity shareholding, that Walmart did not already own, to Walmart.
“Massmart is a key component of South Africa’s retail sector which employs thousands of people and contributes to economic growth on the continent. As a bank committed to Africa and her people, we recognize the value of this transaction in building Massmart’s resilience in an intensely competitive and challenging economic environment,” said Clive Potter, head of Client Coverage SA at Standard Bank.
“Standard Bank is proud to have supported Massmart on this transaction that will go a long way in renewing investor interest and confidence in South Africa. Walmart’s expertise and support will unlock significant growth opportunities for Massmart, which in turn have the potential to create jobs and develop local economies across the region,” said Michael Dempster, Executive, Advisory at Standard Bank Group.
A cash price of R62 per share was proposed through a scheme of arrangement or a general offer, presenting an opportunity for minority shareholders to realize immediate value in an environment where there are no near-term catalysts for a Massmart re-rating.
“Walmart is excited to be able to build on the long-term commitment we have already made to our South African customers, associates, and partners. Most importantly, this transaction represents a positive vote of confidence in Massmart and in South Africa, which will allow us to continue to contribute meaningfully to future economic growth in the region,” said Judith Mckenna, Walmart International CEO.
Processes are underway to delist Massmart from the Johannesburg Stock Exchange. Following this, Massmart will be a fully owned Walmart subsidiary.