Walmart plans to take Massmart Holdings private and will promote the unit’s chief operating officer to head of the company as it prepares to renew its focus on South Africa.
The global retail giant plans to buy all of the shares it doesn’t already own of Massmart for 62 rand (€3.68) apiece, a 53 per cent premium to the last closing price, and delist the company from Johannesburg’s main bourse. Jonathan Molapo, who joined Massmart in January as COO, will take over as chief executive a year after he joined the company. He replaces Walmart veteran Mitchell Slape.
Walmart is preparing for increased competition amid press reports that Amazon.com is planning to expand into Africa’s most industrialised nation. Taking Massmart private may help Walmart cut costs and invest in the company that owns brands including Makro and Builders without the scrutiny that comes with being a public company.
The stock jumped 45 per cent at the close in Johannesburg, paring its loss for the year to 3.3 per cent.
Walmart has been exiting low-growth markets and concentrating on partnerships or stakes in local participants. The company has sold Asda in the UK, Seiyu in Japan and its Argentina operations.
“Basically all markets outside of the US, they haven’t made an imprint,” Evan Walker, money manager at 36ONE Asset Management Ltd in Johannesburg, said referring to Walmart. “It’s going to be interesting to see if they come out now very aggressively against other retailers from a buyer perspective.”
Walmart bought a majority stake in Massmart in 2011 for 16.5 billion rand. – Bloomberg
