|Published:||Jan 17, 2011 9:16 PM EST|
|Updated:||Jan 17, 2011 6:17 PM EST|
JOHANNESBURG (AP) - A South African chain's shareholders have overwhelmingly accepted Wal-Mart's offer to buy 51 percent of their company, the chief executive said Monday, paving the way for the giant U.S.-based retailer to enter Africa.
Massmart said the proposal was approved by 97 percent of shareholders who voted Monday - 75 percent had been needed. Wal-Mart offered 148 rand (about $20) per share in a 17 billion rand (about $2 billion) deal.
The deal will have to be approved by South Africa's anti-monopoly regulators.
Massmart CEO Grant Pattison said once the deal goes through, Massmart will continue to operate the stores and continue to be listed on the Johannesburg Stock Exchange, while Wal-Mart will be the main owner. Massmart runs about 290 big box, pharmacy, electronics and other stores in 14 African countries.
"They are a great retailer and we really are looking forward to learning something from them, and teaching them something about Africa," Pattison told The Associated Press. "We're excited because they're coming as our partners."
Wal-Mart, based in Bentonville, Arkansas, has 8,692 stores in 15 countries, among them Brazil, China and India. But it has not until now ventured into Africa.
South Africa has the most developed economy on a continent slowly emerging from grinding poverty, and one that fared better than other parts of the world during the global recession. Consulting firm McKinsey & Company has concluded that global business cannot afford to ignore Africa's potential, or its growing middle class. The World Bank has said the continent is finally seeing the results of years of market reforms and investment in education and health care.
Business here has welcomed Walmart's arrival as recognition of the potential of the continent's economy, and of the reach South African retailers have throughout Africa.
South African labor groups, though, say that Wal-Mart is anti-union. Wal-Mart has said it would respect contracts and is committed to working with South African unions.
Sidumo Dlamini, president of the powerful Congress of South African Trade Unions, was at Massmart's Johannesburg headquarters for Monday's shareholders' vote. He said that while the approval was expected, he was disappointed.
The deal holds "nothing for the workers. We have empirical evidence from other countries where Wal-Mart is operating. It has never done anything for the workers," Dlamini said.
Labor activists from South Africa and abroad addressed the shareholders' meeting. One of the speakers, Michael Bride of the 1.3 million-member United Food and Commercial Workers International Union of USA and Canada, said he had not expected shareholders to turn down the offer.
"Shareholders can be forgiven for voting in their own interest," Bride said.
Among those with major Massmart holdings are South Africa's government-owned Public Investment Corp., which invests on behalf of civil service pension funds, and Scotland's Aberdeen Asset Management. Massmart workers, most of whom are black, also have a stake through a trust set up as part of a South African campaign to help those denied economic opportunities under apartheid.
Bride said the next step for the unions would be appealing to South African regulators, in hopes of - if not stopping the deal - persuading the government to impose conditions. Among the provisions unions want are guarantees Wal-Mart will buy local, which Bride said would protect jobs in a country with unemployment of at least 25 percent.
Pattison, the Massmart CEO, said he had assured unions no jobs would be lost and no labor contracts violated. And he said consumers would benefit.
"We would have failed if we don't bring prices down," he said.
Gerard Heath, a businessman pushing a load of sugar and bulk-pack toilet paper out of one of Massmart's Makro big box stores Monday, said lower prices would be just one benefit. He hoped African factories would find global markets for their products through Wal-Mart, and that Massmart's local rivals would be pushed to improve service.
"It will make Africa a lot more competitive," Heath said.
Nozipho Mkhonza, who works at a printing company and buys supplies for work and home at Makro, said she now needs to visit several stores to find all the items on her shopping list. She hoped that with Wal-Mart backing, Makro would widen its product range.
"If I can find everything under one roof," Mkhonza said, "all the better for me."
(Copyright 2011 by The Associated Press. All Rights Reserved.)