Wal-Mart Stores Inc. (WMT) announced that it intends to acquire South Africa-based consumer goods distributor Massmart Holdings Ltd. for about $4.25 billion (ZAR 148 per share). The proposed acquisition is in line with Wal-Mart’s policy to accelerate growth and improve returns in its international business segment.
Management believes that Africa is among the high-growth developing markets of the world. The deal is subject to regulatory conditions and is an indicative and non-binding offer.
Further, management states that the deal, if successful, will offer Wal-Mart a convincing growth opportunity, as South Africa comprises attractive market dynamics, encouraging demographic trends and a growing economy.
Johannesburg-based Massmart is not only a leading distributor of consumer goods in Africa and but is also the largest retailer of general merchandise, liquor, home improvement equipment and supplies as well as the leading wholesaler of basic foods. The company currently operates 288 stores in 14 countries of Sub-Saharan Africa. The company also has nine wholesale and retail chains and one buying group.
In the recently reported quarter, Wal-Mart added almost 5 million square feet of retail space, with almost 60% growth in Wal-Mart International. Wal-Mart ended the second quarter of fiscal 2010 with free cash flow of approximately $4.5 billion, reflecting a 7.1% increase year-over-year.
Based in Bentonville, Arkansas Wal-Mart Stores, Inc. operates retail stores in various formats across the world. The company conducts its business through three segments: Walmart U.S., International and Sam’s Club. The Walmart U.S. division accounted for 63.8% of the company’s fiscal 2010 net sales of $405 billion. The segment operates retail stores in different formats in the United States, in addition to Walmart’s online retail operations, walmart.com.
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