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Walmart’s South Africa Deal Getting Close
Posted on | May 26, 2011 | Comments Off
Walmart continues to await the decision of South Africa’s Competition Tribunal on the potential 51% acquisition of South Africa’s Massmart. With a decision imminent, it is looking good for Walmart.
Local unions and government have expressed concern over the acquisition for two reasons:
- They are worried Walmart’s acquisition will lead to job cuts
- They are worried Walmart’s acquisition will hurt local suppliers as Walmart imports products from outside South Africa
Walmart has agreed to stipulations regarding job cuts, but will not agree to stipulations regarding product procurement.
The reason this is looking good for Walmart is because the decision will be seen as a major test for possible future foreign investment into South Africa and violate international trade laws which South Africa has signed off on. As a member of the World Trade Organization (WTO), a country cannot demand a country buy products from specific suppliers as a condition on approval for an investment. This bodes very well for Walmart.
I expect the deal to go through and Walmart to start its long-term growth in this emerging market.