Mar 25, 2011
Massmart says govt request would hurt business
Mar 25, 2011
March 24 - South African retailer Massmart, in which Wal-Mart wants to buy a controlling stake for $2.3 billion, said on Thursday a government request for Wal-Mart to use mostly domestic suppliers would hurt business.
A WalMart store in Buenos Aires. This deal would be Wal-Mart's biggest acquisition since it bought British supermarket chain Asda in 1999
"We are fully supportive of local manufacturing but it would be disruptive of the competition process championed under the Competition Act to impose local procurement targets on one retailer to the exclusion of its competitors," chief executive Grant Pattison said.
South Africa's Competition Tribunal on Tuesday postponed hearings scheduled for this week into Wal-Mart's bid for 51 percent stake in Massmart after the government asked for more time to submit additional information.
Unions and the government want guarantees about Massmart jobs and for Wal-Mart to commit to using mostly domestic suppliers.
The Economic Development Department, which is leading two government departments seeking to block or impose conditions on the deal, has said it did not make detailed representations earlier because Massmart was reluctant to give it relevant information.
Pattison rejected these claims.
"We submitted the information that was asked of us on time and in as much detail as we were able. Any suggestion that this is not the case is misleading," he said in a statement.
Competition authorities are the last obstacle to Wal-Mart taking a 51 percent stake in Massmart after shareholders overwhelmingly voted in favour of the deal in January.
The deal has pitted Wal-Mart against South Africa's powerful trade unions, some of which have threatened to strike against the U.S. group.
Wal-Mart, which agreed to pay 148 rand per share for the stake, said Massmart remained a compelling investment that would give a substantial presence in South Africa and pave the way for further expansion across the continent.
The deal would be Wal-Mart's biggest acquisition since it bought British supermarket chain Asda in 1999.
Shares in Massmart gained 0.76 percent to 133 rand, largely in line with the broader JSE Top-40 blue-chip index.
(Reporting by Tiisetso Motsoeneng; Editing by Ed Cropley)
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