Earlier this month HSBC, Europe's biggest bank, walked away from its proposed acquisition of Nedbank, and on Wednesday Walmart said it would scale back its offer, purchasing a controlling stake in Massmart and moving to keep Massmart listed on the JSE.
Walmart said it was exploring various options regarding the proposed ownership structure of Massmart.
The company, which is based in Bentonville, Arkansas, is known for preferring full control of acquisitions. But it does have several different models of international ownership.
For instance, it has full ownership in the UK, but only 68% of Walmart de Mexico (WalMex), and it is the Mexican model that has now emerged as the most appropriate.
Analysts believe Walmart's change of tack might be due to the opposition of some shareholders to a full takeover.
Syd Vianello, a retail analyst at Nedcor Securities, said some major shareholders had told Walmart that they prefer retaining reduced stakes at Massmart as they see huge opportunities for it.
But a partial takeover could limit Walmart's financial support for Massmart. Nevertheless, Massmart standx to gain significantly from a large cash injection and access to Walmart's management expertise.
Massmart chief executive Grant Pattison said the latest announcement, "is indicative that the discussions with Walmart are progressing positively".
Walmart spokesman Kevin Gardner said the company still intended retaining Massmart management.
Highlighting how the deal might be similar to WalMex, Gardner said Mexico was a growth market, and WalMex's shareholders had benefited from the growth and resulting increased value from the public trading of Walmex's shares.
Walmart sees Africa as its next emerging market frontier after having expanded aggressively in China and Latin America.
Source: Business Times
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