Massmart, parent company of Makro, looks set to be fully taken over by Walmart, as the US retail giant doubles down on its SA operations. Despite a challenging economic environment, Walmart believes in the South African-based business and the impact it has and can potentially have in Africa. Massmart shares on the JSE skyrocketed after the news broke, as the proposed price per share is much higher than where the share price was trading on the stock exchange at the time.
Read: Vodacom now offers cash loans with VodaLend
The potential offer would see Walmart acquiring all outstanding shares in Massmart for R62/share – a premium of 53% to Friday’s closing price of R40.51/share. It’s a 62% premium to the 90-day volume-weighted average share price.
“The potential offer presents an opportunity for minority shareholders to realise immediate value in an environment where there are no near-term catalysts for a Massmart rerating,” Massmart said. An independent board, established by Massmart, has already determined that the terms of Walmart’s proposed offer are “fair and reasonable”.
“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, which has been impeded by external factors such as Covid-19-related trading restrictions, civil unrest in KwaZulu-Natal and a challenging economic environment. These factors have exacerbated liquidity risk at Massmart, which Walmart’s financial support has helped to mitigate.”
“This support includes a R4-billion loan provided by Walmart to Massmart at the height of the Covid-19 lockdown in April 2020, 50% of which was subsequently converted, in December 2021, into equity through a perpetual fixed-rate unsecured note.”
“With an expected inflow of foreign direct investment estimated at R6.4-billion, this potential offer, if finalised, represents a positive vote of confidence in South Africa by the world’s leading retailer. As a credible and high visibility international enterprise, with a 12-year operational history in South Africa, Walmart’s potential offer could stimulate investor interest and confidence in the face of depressed local and international investor sentiment, thereby assisting in the economic recovery of the country.”
