Wal-Mart to scale down takeover offer of South African retailer Massmart

Wal-Mart, the world's largest retailer, is planning to scale down its $4.2 billion total takeover of South African retailer Massmart and instead opt for a smaller stake following consultations with major Massmart shareholders and the South African government.

Massmart yesterday said in an update that Wal-Mart is investigating potential options for and the merits of retaining Massmart's listing on the Johannesburg Stock Exchange after having consulted with major Massmart shareholders and key South African stakeholders regarding its proposed takeover offer.

Wal-Mart, the Arkansas-based world's largest retailer, last month made a $4.2 billion (29.8 billion rand) takeover offer for South Africa's s biggest food and general goods wholesaler Massmart. (See: Wal-Mart launches $4.2 billion takeover bid for South Africa's Massmart)

Wal- Mart is now planning to make a partial offer to acquire over 50 per cent rather than a full buyout at its earlier offer price of 148 rand ($21) per share, said Massmart in a statement.
A revised bid from the retail giant would come after major shareholders of Massmart, a majority of whom are non-South Africans, indicated that they would prefer to keep a stake in the company and take part in Massmart's future growth in Africa, where the population is expected to reach 2 billion by 2025.

Armed with a $5-billion war chest for overseas acquisition, Wal-Mart International president Doug McMillon had recently sold the company's expansion plan to a group of investors in the US. According to him, spending in sub-Saharan Africa is expected to grow from $860 billion in 2008 to over $1.4 trillion in 2020.

Analysts have said that the South African government also may have played a role in Wal-Mart abandoning its total takeover of Massmart since the US retailer comes with a reputation of killing local competition.