South Africa’s Competitions Tribunal has finally approved US retail giant Walmart's takeover of South African retail group Massmart, with South African consumers told that the retailer's arrival in South Africa will lead to lower prices.
The legal battle to approve the deal, which has lasted months, pitted Walmart and Massmart against three South African government departments, as well as the South African and international trade union organisations who argued it would not be in the interest of local suppliers.
Finally, this week, Walmart and Massmart won the argument. But observers say it will take some time before the real fall-out from the deal will be seen.
Massmart owns several South African retailers, including Game, DionWired, Makro, Builders Warehouse and Masscash, but its activities in the fresh produce sector are very limited.
While Walmart International CEO Doug McMillon has promised to create new jobs, offer better prices and open stores in underserved communities, South Africa’s biggest trade union, Cosatu, has threatened large-scale protests to demonstrate its opposition to the deal.
The Competitions Tribunal's approval comes with certain conditions, namely that the company cannot retrench any staff within the first two years, that all existing labour agreements be maintained for at least three years and that a R100m fund be created to support local suppliers.
Walmart will obtain 51 per cent of Massmart and the deal is reported to be valued at R16.5bn.
Retail watchers in South Africa says the coming months will indicate just how Massmart will approach involvement with the produce sector.
The South African fresh produce retail sector has grown considerably during the past decade and may be a very attractive area for the new owners to pursue.
Observers also say that there may be much more to the Walmart entry into South Africa than meets the eye.
South Africa is generally seen as the gateway to Africa and from east to west the powerhouses of the world are positioning themselves to participate in growth opportunities on the continent.
From a fresh produce perspective, the road via South Africa would seem to be attractive for Walmart too.
