Business
South Africa: Walmart takeover of Massmart approved by court
The court acknowledged concerns about the impact of the takeover, with fears that local suppliers and jobs will be hit by the US retailer’s global buying power amid an official unemployment rate of 23.9 percent.
But it said South Africans will benefit from lower prices that could have job creation effects that would outweigh possible job losses.
“There was insufficient evidence to conclude that the deterimental effects of the merger would outweigh the clear benefits,” stated a summary of the ruling.
Massmart executive Brian Leroni told reporters that the companies looked forward to working with the government and labor in developing local suppliers.
“Massmart and Walmart welcome the decision that has been handed down,” he said.
The court did agree to requests by a union for some conditions on the deal, including a two-year ban on job losses and the reinstatement of 503 retrenched employees.
The merging parties have agreed to a 100 million rand (US$13.3 million) fund to develop local suppliers but the court found that there was not enough detail on how this would work.
With the new study, “the court will then be empowered to formulate the mandate and the conditions by which such a fund or similar proposal would operate,” the summary said.
