The South African Competition Tribunal on Tuesday ruled that the Wal-Mart and Massmart merger can proceed.
The tribunal accepted the conditions proposed by Wal-Mart and Massmart, including a 100 million South African rand ($15 million at current exchange) supplier development fund, no merger-related staff reductions for two years and continued recognition of the South African Commercial, Catering and Allied Workers Union for three years after the merger. The tribunal also said preference should be given to hiring 503 workers that were let go prior to the merger proposal’s announcement.
Wal-Mart Stores Inc. in November acquired 51 percent of the Johannesburg-based retailer for 17 billion South African rand, or $2.36 billion. The Massmart board unanimously approved the transaction and the deal in January was approved by the necessary 75 percent of shareholders. All it needed to proceed was approval by the South African competition authorities.
With the last obstacle removed, Wal-Mart said it intends to provide Massmart with increased financial stability and support to continue strengthening its presence in Africa. The combined Wal-Mart-Massmart entity is planning “significant new store openings that will create thousands of union jobs in South Africa,” Wal-Mart said. In addition, the Massmart food business is expected to grow more than 50 percent over a five-year period.
Wal-Mart promised to create new jobs to support the development of South African exports and to provide previously underserved customers and communities with better prices and access to products they want and need. Wal-Mart said it will help improve the local supply chain, including providing logistics expertise, inventory management and better forecasting to help South African suppliers.
Massmart operates 288 stores.