Massmart had said on Monday that its majority owner Walmart had offered it R6.4 billion to purchase the remaining shares and to delist the company from the Johannesburg Stock Exchange.
The offer would allow Walmart to cut costs, invest more capital and turn around Massmart which has been posting losses and losing market share to bigger local rivals.
“Ordinary shareholders are hereby advised that Massmart and Walmart entered into an implementation agreement on August 31, 2022 in terms of which Walmart indicated its firm intention to make an offer,” the companies said in the statement.
The firm intention essentially means that the company has the cash in hand to go ahead with the purchase and will now seek approval of the authorities.
The two boards were of the view the proposed transaction would enable Walmart to continue its “overweight” support as a long-term shareholder and allow Massmart shareholders to realise value, they said.
Since buying its stake in 20 go-to retailer in South Africa, but failed to do so due to competition from strong lo10, Walmart had tried several strategies to make Massmart rival Shoprite, Woolworths and Pick n Pay.
“The proposed transaction is a strong reaffirmation of Walmart’s commitment to Massmart and to South Africa,” the statement said.
Walmart will buy the shares using its cash reserves and has set a tentative date of December 31 to complete the process, it said, adding that more details would be published on September 23.
REUTERS