Walmart Announces Plans To Buy Out Massmart
Walmart Announces Plans To Buy Out Massmart. Potential Offer proposes Walmart acquiring all of the outstanding shares of Massmart for a price of ZAR62 per share by way of a scheme of arrangement or . general offer if the scheme of arrangement does not become operational.
This represents a premium of 53% to the closing share price and a 62% premium to the 90-day volume weighted average share price calculated at close of market on 26 August 2022. In addition, the Potential Offer presents an opportunity for minority shareholders to realise immediate value in an environment where there are no near-term catalysts for a Massmart re-rating.
Commenting on behalf of the Massmart Board, Chairman Kuseni Dlamini said, “In line with our fiduciary duty, an Independent Board was established to evaluate the terms and conditions of the Potential offer from Walmart. The Independent Board commissioned a fair and reasonable opinion from an Independent Expert who has provided a preliminary report indicating that the terms and conditions are fair and reasonable. The Massmart Independent Board, after taking into account the preliminary report of the Independent Expert, is unanimous in its preliminary opinion, that the terms and conditions of the Potential Offer are fair and reasonable.”
The Potential Offer, if finalised, will provide Massmart with needed access to ongoing financial and operational support from Walmart to sustain the Group’s turnaround, which has been impeded by external factors such as Covid-19 related trading restrictions, civil unrest in KwaZulu-Natal, and a challenging economic environment. These factors have exacerbated liquidity risk at Massmart, which Walmart’s financial support has helped to mitigate. This support includes a R4 billion loan provided by Walmart to Massmart at the height of the Covid-19 lockdown in April 2020, 50% of which was subsequently converted, in December 2021, into equity through a perpetual fixed rate unsecured note.
With an expected inflow of Foreign Direct Investment estimated at ZAR6.4 billion, this Potential Offer, if finalised, represents a positive vote of confidence in South Africa by the world’s leading retailer. As a credible and high visibility international enterprise, with a 12- year operational history in South Africa, Walmart’s Potential Offer could stimulate investor interest and confidence in the face of depressed local and international investor sentiment, thereby assisting in the economic recovery of the country.
