Wal-Mart in South Africa

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Wal-Mart the world's largest retailer offered to buy a controlling share in Massmart in order to have a substantial presence in South Africa and paving the way for further expansion across the fast-growing continent.

By joining Wal-Mart will help Massmart speed up its expansion in sub-Saharan Africa and its plan to increase its food retailing business.

The deal will also likely ditch Wal-Mart, which has long battled with organised labour in the United States, against South Africa's powerful trade unions, some of which have threatened to strike against the US firm.

Massmart will however retain its South African management and local identity after the deal.

The only change will be that Wal-Mart people around South Africa will start running the company and that South African management will continue to manage the business.

By taking 51 percent of Massmart, Wal-Mart will gain control of the firm and keep it listed in Johannesburg, which may have been critical in getting a go-ahead from South African authorities.

The deputy general secretary of the South African Commercial, Catering and Allied Workers Union (SACCAWU) said this month he could not rule out the possibility of a strike if the deal went through.

The two companies said Wal-Mart has received “irrevocable undertakings” from institutional shareholders holding 35.2 percent of Massmart shares that they would vote in favour of the deal.

In addition it has received non-binding letters of support from shareholders holding about 15 percent of Massmart's shares.

The deal will help Massmart accelerate its expansion in Nigeria, Ghana, Malawi and Uganda, as well as bolster its supply chain in perishable items.