Walmart Enters Africa with $2B Massmart Purchase

JOHANNESBURG, SOUTH AFRICA-The board of Massmart Holdings Ltd., based here, have agreed to sell a 51% stake in the retail chain store company to Bentonville, AR-based Walmart. The sale is for 51% of the company’s shares, at about $21.50 per share, or roughly $2 billion.

Walmart, the massive chain with almost 8,700 stores across the world, has its US-based footprint in countries such as Brazil, China and India, but this will be the company’s first foray into Africa. Massmart has nine wholesale and retail chains in 288 stores, operating under banners such as Makro, Game, Dion Wired and Builders Warehouse.

The Massmart stores will continue to operate under their banners, but will be owned by Walmart. Doug McMillon, president and CEO of Walmart International, said South Africa is an “important region with attractive growth characteristics,” in an earlier statement about the takeover. “This combination fits perfectly with our strategy to enter high growth markets in which we can apply our global expertise and generate strong returns,” McMillon said.

The global retailer promised it would continue to honor the local requirements, including union contracts. The sale approval now goes before the South Gauteng High Court on Feb. 1 to examine the plan and ensure it passes anti-monopoly and other local laws.

While Walmart enters a new country, McMillon said it also recently decided it will not enter another. The company is pulling its office out of Moscow after announcing in December that it couldn’t find a partner. “The Russian market is a compelling retail opportunity and we believe that Russian consumers could benefit from Walmart,” McMillon said in a recent statement. He said the company had tried to enter the market through acquisition, not greenfield development.