Walmart Offers To Buy Remaining Stake In Africa's Massmart For ZAR62 Per Share

(RTTNews) - Retail giant Walmart Inc. (WMT) announced a potential offer to acquire remaining stake in Massmart, an African retail and wholesale group, that it does not already own for ZAR62 per share.

The Boards of Directors of both companies have reached an in principle agreement regarding the terms and conditions associated with the potential offer.

As per the agreement, Walmart will buy the stake by way of a scheme of arrangement or a general offer if the scheme of arrangement does not become operational.

The offer represents a premium of 53 percent to the closing share price and a 62 percent premium to the 90-day volume weighted average share price calculated at close of market on August 26.

The potential offer, if finalised, will provide Massmart with needed access to ongoing financial and operational support from Walmart to sustain its turnaround. The plan has been impeded by external factors such as Covid-19 related trading restrictions, civil unrest in KwaZulu-Natal, and a challenging economic environment.

Walmart has given financial support to Massmart, includings a R4 billion loan provided at the height of the Covid-19 lockdown in April 2020, 50 percent 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, the potential offer, if finalised, represents a positive vote of confidence in South Africa by Walmart.