South Africa Approves Wal-Mart, Massmart Merger With Conditions
Wal-Mart’s (NYSE:WMT) $2.4 billion bid to acquire a majority stake in Massmart received a green light with limited conditions from regulators in South Africa on Tuesday.
While some conditions will be required, South Africa’s Competition Tribunal decided not to enforce local purchasing quotas on the merged company despite a push from unions who threatened huge boycotts.
The deal also received some opposition from three government department amid fears Wal-Mart’s massive supply network could hurt employment and local companies.
The Competition Tribunal said it has approved the deal so long as the combined company agrees not to fire workers for two years and gives preference to re-employing 503 workers who were fired in 2010.
The antitrust regulator also said Wal-Mart must honor existing labor agreements and must establish a program for development of local suppliers. The merged company will be required to report back to the Competition Commission annually about its progress.
“We're pleased that the competition authorities have recognized the benefits that our investment in Massmart can deliver," Doug McMillon, Wal-Mart International CEO, said in a statement.
Last year Wal-Mart unveiled a deal to acquire Massmart, which had $6.8 billion in 2010 sales, in an effort to gain a foothold in another high growth market.