U.S retail giant Walmart which owns a majority stake in Massmart, has proposed to acquire the rest of the shares in the company in a deal valued at 1.34 billion rands ($78.93 million), the South African retailer said on Monday.
Walmart has offered 62 rands for each outstanding Massmart share.
The retailer had acquired majority control of Massmart through a 51% stake in 2010. Over the past decade, Walmart has had to provide increasing levels of support across Massmart’s businesses as they continued to underperform due to various reasons, including consumers holding back from purchasing electronics and home goods.
To fix this, Massmart’s management launched a turnaround plan in 2019 that involved selling off non-core assets, removing fresh food from its Game stores and cutting costs across the group.
However, the turnaround plan has faced many headwinds, primarily the COVID-19 pandemic and the civil unrest in 2021, which resulted in the loss of operations and disruptions to the supply chain on certain key inventory lines, flooding, and weak consumer demand for general merchandise, Massmart said.
“The potential offer, if finalised, will provide Massmart with needed access to ongoing financial and operational support from Walmart to sustain the group’s turnaround,” Massmart added.
If the offer is made and implemented, it would result in the delisting of Massmart, Massmart said.
The retailer, with 403 retail and wholesale stores in 13 African countries, said the headline loss for continuing operations in the 26 weeks ended June 26 widened to 903.5 million rands ($53.18 million) from a loss of 358.5 million rands in the year-ago.
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