Walmart, the world’s biggest retailer, is close to agreeing a deal marking its first foray into Africa after bidding 16.5bn rand (£1.5bn) for control of South Africa’s Massmart.
The deal, which has been agreed with Massmart’s board but needs shareholder approval, faces strong opposition from the South African retailer’s main union, which mounted a legal challenge to the takeover, threatened strike action and said it planned to participate in the competition review.
Walmart, which owns the Asda supermarket chain in the UK, hopes to acquire 51% of Massmart, which operates 288 low-cost stores in 14 African countries. These sell products through a handful of retail brands, spanning construction materials to home appliances, most of which are based in South Africa.
Andy Bond, chairman of Asda, who is responsible for operations in Africa, said acquiring Massmart would give Walmart a good platform to enter the continent and expand into some of its faster-growing, more politically stable countries.
However, he insisted that Massmart’s direction would be set by the South African retailer’s existing senior management, who would remain in place and that Walmart’s involvement would simply “accelerate the current strategy”.
Massmart expects to open up to 40 new outlets annually in the coming years, with an emphasis on countries such as Nigeria, Malawi and Zambia, where it already has a presence. Furthermore, Massmart is targeting new markets such as Senegal, Cameroon and Angola.
Bond said Walmart would help Massmart to significantly increase its food offering, which is presently largely confined to its wholesale operation, and will help expand the number of own-label products offered by the South African retailer.