Inside a branch of Jumbo Cash ‘n Carry,
one of the many big box range of stores
operated in South Africa and elsewhere on
the continent by Massmart, the company
Wal-Mart has offered to buy for
$4.2-billion.
(Image: Massmart)
This article originally appeared on page
one of South Africa Now, a six-page
supplement to the Washington Post
produced on behalf of Brand South Africa.
(Click to enlarge.)
MEDIA CONTACTS
• Brunswick Group LLP, Strategic
Communications Advisors: Massmart
+ 27 11 502 7300
massmart@brunswick.co.za
RELATED ARTICLES
• Brewing up a global brand
• SA possible new BRIC member
• Fortune 500 head to Cape Town
• SA-China trade ties strengthen
• SA best for regulation of exchanges
By offering to acquire South African retailer Massmart for an estimated US$4.2-billion (R28.5-billion), Wal-Mart in late September 2010 joined the parade of global companies looking to South Africa as a springboard into what is increasingly seen as the world’s last great investment frontier.
“What better evidence can there be of Africa’s burgeoning potential as a consumer market than Wal-Mart’s desire for a foothold on the continent?” the Financial Times‘ Beyondbrics blog asked.
Wal-Mart’s move followed hard on the heels of Nippon Telegraph and Telephone‘s $3.2-billion (R21.5-billion) bid for Dimension Data, HSBC‘s expressed interest in acquiring 70% of Nedbank, and DuPont‘s decision to seek a majority stake in Pannar Seed.
Andy Bond, chairman of Asda, Wal-Mart’s UK operation, said, “South Africa presents a compelling growth opportunity and offers a platform for growth and expansion in other African countries. South Africa possesses attractive market dynamics, favorable demographic trends and a growing economy.”
Headquartered in Johannesburg, Massmart operates 232 stores in South Africa stores and 32 in other African countries including Botswana, Zimbabwe, Tanzania, Nigeria and Ghana, according to its website. The company is known for its big box chains, which include Makro, Game and Builders Warehouse. Other South African retailers with growing African footprints include Shoprite and Pick n Pay.
The acquisition would be Bentonville, Arkansas, giant’s largest since 1999 when it purchased Asda. Wal-Mart has already been sourcing fruit from South Africa. It buys 500 000 cartons of citrus for its US stores each year, 2.4-million boxes of apples and pears for the UK and 50 000 boxes of grapefruit for Japan.
“Africa’s economic pulse has quickened, infusing the continent with a new commercial vibrancy,” McKinsey and Co concluded in a widely read report released in June, titled Lions on the Move (PDF, 2.8 MB). The report singled out the three sectors represented in the latest series of acquisition moves as “flourishing” – retail, banking and telecoms.
McKinsey reckons that by 2020 Africa’s consumer spending will reach $1.4-trillion (R9.5-trillion) up from $860-billion (R5.8-trillion) in 2008, and there will be 128-million Africans with discretionary income. “Africa’s long-term growth will increasingly reflect into related social and demographic trends that are creating new engines of domestic growth. Chief among these are urbanisation and the rise of the middle class African consumer.”
Wal-Mart’s initial offer of R148 ($23) a share for Massmart, a 10% premium on the previous close, reflected in part the solid track record South African companies have established in the rest of the continent. That record, the Financial Times commented last April, gave “weight to government aspirations to occupy a place at the table of the BRICs, the big emerging markets whose rise has begun to transform the shape of the world economy.”
- Download South Africa Now in PDF format (2.2 MB), or read selected articles online:
Powering towards a green economy
South Africa plans to build a massive $21.8-billion, 5 000 MW solar park in its semi-desert Northern Cape province as part of an aggressive push to grow its highly industrialised economy without increasing its carbon footprint.
The everyday beauty of Soweto
South African photographer Jodi Bieber has a special ability to bring out the beauty in the ordinary, even the disfigured. On the cover of Time magazine she made a mutilated Afghani girl look beautiful, and in her latest book Soweto she makes everyday township life shine.
Launchpad to a billion consumers
By offering to acquire Massmart for some $4.2-billion, Wal-Mart has joined the parade of global companies looking to South Africa as a springboard into what is increasingly seen as the world’s last great investment frontier.
A trek to the start of time
It will probe the edges of our universe. It will be a virtual time machine, helping scientists explore the origins of galaxies. It’s the Square Kilometre Array, and South Africans are at the heart of its development.
Brewing up a global brand
Miller Lite. Tastes great. Less filling. And brought to you by world-beating South African company SABMiller.
Looking south and east for growth
As the shift in global economic power gains momentum, South Africa’s trade is moving eastwards and southwards in a pattern that both reflects the worldwide trend and helps drive it, writes John Battersby.
More than just a celluloid Mandela
There is a special bond between Hollywood actor Morgan Freeman and the man he played in the Clint Eastwood movie Invictus, South African statesman Nelson Mandela.
Africa in the new world order
Kgalema Motlanthe, South Africa’s deputy president, looks at how African economies’ resilient performance during the global financial crisis points to the continent’s new place in a changing world.
Mining history for new solutions
Mark Cutifani, CEO of the multinational AngloGold Ashanti mining company, examines why South Africa’s past is key to successfully doing business here in the future.
Turning up the media volume
Since 1990, South Africa has been a noisy place. After decades of apartheid censorship, the lifting of restrictions on the media led to a cacophony of debate. For the first time in centuries, everyone could be heard, and it was sometimes deafening, writes Anton Harber.
A joule of an energy-efficient car
South Africa, which builds BMWs and Mercedes Benzes for the US market, is in the thick of the race to deliver a truly practical – and stylish – electric car. Meet the Joule.
South Africa: Time to believe
The forgiving philosophy of “ubuntu” helps explain how South Africa managed to transcend its turbulent apartheid past and create a unified democracy, writes Simon Barber.
Finding sound real estate investment
South Africa’s post-apartheid transformation and new middle class are fuelling demand for affordable homes. For private equity fund International Housing Solutions, that means opportunity.
My normal, crazy, mixed-up country
South African hit movie White Wedding is now showing in the US to rave reviews. Jann Turner, who directed and jointly wrote and produced the film, writes about the place that inspired it – South Africa.
Bring on the braai
All South Africans love it – including Nobel peace prize-winning Desmond Tutu – and its rich, smoky smell floats over the country every Sunday. Celebrate the braai with our great recipe for making boerewors, traditional South African farmer’s sausage.
