Wal-Mart launches $4.2 billion takeover bid for South Africa’s Massmart

Wal-Mart, the world's largest retailer, has made a $4.2 billion (29.8 billion rand) takeover offer for South Africa's s biggest food and general goods wholesaler Massmart.

Johannesburg-based Massmart, one of the largest distributors of consumer goods on the African continent and is the leading African retailer of general merchandise, home improvement equipment and supplies, informed the the Johannesburg Stock Exchange informing that it had received a non-binding expression of interest from Walmart.

Massmart focuses on high-volume, low-margin, low-cost distribution of mainly branded consumer goods for cash, which makes it the market-leading retailer of basic foods in the region. The company runs 290 stores in 13 countries in Africa, with the vast majority of its stores in South Africa, and manages eight wholesale and retail chains operating under a variety of different brand names.

For 2010 ending June, the company posted revenues of 47.55 billion rand up 10 per cent on a year earlier and net profit of 1.2 billion rand.

Arkansas-based Wal-Mart has made an indicative, non-binding cash offer of 148 rand per share and has been given the right to conduct due diligence, and a period of reciprocal exclusivity granted by Massmart and Walmart.

"We believe this proposed acquisition is a great opportunity to deliver on that mission for all the people in the regions of the African continent where Massmart currently operates. We have the opportunity to leverage our experience from around the world to more effectively serve customers, create opportunities for our associates and add shareholder value,'' said Doug McMillon, president and CEO of Walmart International.