Wal-Mart makes firm offer on South African group

[May 10, 2011]  JOHANNESBURG (AP) -- The U.S. giant retailer Wal-Mart is offering to buy 51 percent of South Africa's Massmart stores, the two companies said in a joint statement Monday.

Wal-Mart is offering 148 rand (about $20) per share to Massmart stockholders in a 17 billion rand (about $2 billion) deal that has sparked concern among South African unions. It would be Wal-Mart's first African foothold. Massmart shares were trading at 143.75 rand Monday morning, up 1.45 percent from Friday's close. Massmart shares have been buoyed since Wal-Mart's interest first became public in September.

Massmart will continue to be listed on the Johannesburg exchange, addressing a concern of some major Massmart stockholders that led Wal-Mart to revise an earlier bid to buy all of Massmart.

Massmart's board recommended shareholders accept, according to Monday's statement, which added that major institutional shareholders supported the deal.

Earlier this month, South Africa's main retail workers union said its members would strike if necessary to force Wal-Mart to respect labor and protect jobs. They acknowledged they have little power to stop the deal.

Wal-Mart has said it would respect any existing union contracts and was "committed to working constructively with the local unions in South Africa."

Union leaders did not immediately return calls seeking comment Monday.

In a statement, Doug McMillon, president and chief executive of Wal-Mart International, made clear his company is pursuing a regional strategy.

"The more we learn about South Africa and the surrounding countries the more we are convinced that this is an important region with attractive growth characteristics," he said.

Massmart, based in Johannesburg, runs about 290 big box, pharmacy, electronics and other stores in 14 African countries, mostly in South Africa.

[Associated Press]

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