Walmart has offered $377.6 million to acquire the remaining 46.6-percent interest in Massmart Holdings that it does not own as it attempts to complete its takeover of the South African retailer.
Massmart Holdings, founded more than three decades ago by South African businessman Mark Lamberti, is presently the continent’s second-largest distributor of consumer products and its biggest retailer of general commodities, booze, home improvement equipment, and basic foods.
In line with the planned $377.6-million deal, Walmart offered R62 ($3.66) for each outstanding Massmart share, a premium of 53 percent over the company’s opening share price this morning.
“With an expected inflow of foreign direct investment estimated at R6.4 billion ($377.6 million), this potential offer, if finalised, represents a positive vote of confidence in South Africa by the world’s leading retailer,” Walmart stated.
The news of the multimillion-dollar acquisition sent Massmart shares flying by more than 42 percent to R57.58 ($3.4) per share, putting the company’s market value above R12.62 billion ($745.8 million) at the time of writing.
If the shareholders agree, the retailer will be delisted from the Johannesburg Stock Exchange and will become a wholly owned subsidiary of Walmart.
Walmart, which currently has a majority 53.41-percent ownership in Massmart, purchased a controlling stake in the South African retailer in 2011 for R148 ($8.74) per share and has also provided financial and operational support across Massmart’s businesses.
Shares in the retailer have fallen by more than 70 percent since 2011, as it continues to face operating challenges brought on by increased competition from Shoprite Holdings, Pick n Pay, and other retailers, a sluggish economy, and the recent depreciation of the rand.
Massmart recorded a loss of R903.5 million ($53.2 million) in the 26 weeks ending June 26, compared to a loss of R358.5 million ($21.2 million) in the same period last year.
