Massmart shareholders vote in favour of delisting and their buyout by Walmart

Massmart, the owner of Builders and Makro, has struggled in South Africa’s weak economy. Picture: Karen Sandison/African News Agency (ANA)

Massmart, the owner of Builders and Makro, has struggled in South Africa’s weak economy. Picture: Karen Sandison/African News Agency (ANA)

Published Oct 24, 2022

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Massmart said a proposal to delist and be taken over entirely by parent US-based Walmart was approved by a required majority of shareholders at a general meeting on Friday.

Walmart intends to acquire 47% of Massmart’s shares in a R6.4 billion offer, representing the shares it does not already own, by way of scheme of arrangement, and it plans to delist Massmart off the JSE shortly thereafter, where it will further restructure the local operation out of the public eye.

The aim is to ramp up the restructuring of the ailing retailer.

Walmart had offered Massmart’s other shareholders R62 per share, which was a 52 percent premium to the pre-offer price.

Massmart’s share price rose 0.8 percent to R61.20 on Friday. The price has appreciated considerably since the R40.52 it closed at on Friday, August 26, and when Walmart first announced its plan to buyout Massmart, on Monday August 29, 2022.

Walmart bought an initial 51% of Massmart for R148 per share in 2011, and had aims to use Massmart to expand into the broader Africa market, one of the last, relatively untapped large retail markets left on the globe.

But Massmart has struggled in South Africa’s weak economy and from strong competitors. During the Covid-19 pandemic Walmart provided Massmart with R4 billion of support.

Massmart, the owner of Builders and Makro, also suffered some R2.5 billion of losses through the July 2021 civil unrest in KwaZulu-Natal, and in December announced it was reorganising its debt and had plans to sell 15 of its 114 Game stores. The fresh food operations also were exited as part of restructuring.

In the 26 weeks to June 30, 2022 Massmart reported a R1.03bn loss, slightly better than the R1.07bn interim loss at the same time a year before.

Last month it said it would close 14 Game stores in east and west Africa so it could focus on its core strengths, and in further efforts to stem losses. These included stores in Nigeria, Ghana, Kenya,Tanzania and Uganda.

BUSINESS REPORT