{"id":433615,"date":"2011-05-31T19:57:27","date_gmt":"2011-05-31T19:57:27","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/05\/31\/south-africa-approves-wal-mart-deal\/"},"modified":"2011-05-31T19:57:27","modified_gmt":"2011-05-31T19:57:27","slug":"south-africa-approves-wal-mart-deal","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/05\/31\/south-africa-approves-wal-mart-deal\/","title":{"rendered":"South Africa approves Wal-Mart deal"},"content":{"rendered":"
\n

South Africa has cleared the way for Wal-Mart to gain its first foothold in Africa, approving the company’s $2.4bn bid for control of retailer Massmart with minimal conditions.<\/p>\n

South Africa’s competition tribunal on Tuesday gave Wal-Mart the go-ahead to buy a 51 per cent stake in Massmart provided the US retailer does not lay off any workers for two years.<\/p>\n

The\u00a0condition is designed to placate organised labour, which has accused the world’s largest retailer of union-bashing.<\/p>\n

“We have decided to approve the merger subject to the undertakings made by the parties becoming conditions for the approval,” the tribunal said in a statement.<\/p>\n

“The merged entity must ensure that there are no retrenchments, based on the merged entity’s operational requirements in South Africa, resulting from the merger, for a period of two years.”<\/p>\n

Wal-Mart in January signed a $2.5 bn offer for a controlling stake in Massmart, which runs nine wholesale and retail chains with 288 stores in 14 African countries.<\/p>\n

‘Mother of all boycotts’<\/strong><\/p>\n

But the deal has been slammed by South Africa’s politically powerful unions.<\/p>\n

The country’s largest labour federation, Cosatu, initially threatened “the mother of all boycotts” if the merger went through.<\/p>\n

The tribunal has ordered Wal-Mart to honour all existing labour agreements and not challenge the position of the country’s largest retail-sector labour union, the South Africa Commercial, Catering and Allied Workers Union.<\/p>\n

But Mike Abrahams, a spokesman for SACCAWU, told the Reuters news agency\u00a0that the union might consider appealing to the Competition Appeals Court.<\/p>\n

“We are meeting with our legal representatives to explore legal possibilities,” he said.<\/p>\n

The deal will for the first time give Arkansas-based Wal-Mart a foothold in Africa and increase its market share in emerging countries, which have been driving its profits as US retail sales have slowed.<\/p>\n

The company believes South Africa is a key market for growth, accounting for some 20 per cent of consumer spending on the African continent.<\/p>\n

The tribunal acknowledged the merger was likely to have losers, as Wal-Mart’s entry might displace small businesses and reduce the market share of some of the country’s major retailers.<\/p>\n

“That is an inevitable consequence of the competitive process,” it said.<\/p>\n

Cheap imports<\/strong><\/p>\n

Unions had raised concerns that Wal-Mart would flood the local market with cheap imports, resulting in job losses at local manufacturers.<\/p>\n

Cosatu also accused the retail giant of being “one of the worst union-bashing employers in the world”.<\/p>\n

The labour federation pledged on\u00a0Tuesday to continue its anti-Wal-Mart campaign.<\/p>\n

“Overall we think that (the tribunal’s approval) is a victory for Wal-Mart and we shall be continuing our campaign against the takeover of the Massmart stores,” Cosatu spokesman Patrick Craven told eNews television.<\/p>\n

“We believe all the reasons for that campaign are still absolutely valid.”<\/p>\n

The government, which has prioritised job creation in its policies, had also voiced concern about the deal, saying South Africa stood to lose jobs to China if the cost-cutting giant boosted imports.<\/p>\n

South Africa is struggling with a 25 per cent unemployment rate.<\/p>\n

Ayo Akanbi, an economist at Pan African Investments told the AFP news agency that the investment was a positive development for the country’s economy but its impact would only be felt if it contributed to job creation.<\/p>\n

“The net effect of the deal will only be favourable for South Africa if it can create jobs and stimulate local industries,” Akanbi said.<\/p>\n

<\/div>\n<\/p>\n

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\nSouth Africa approves Wal-Mart deal<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa has cleared the way for Wal-Mart to gain its first foothold in Africa, approving the company’s $2.4bn bid for control of retailer Massmart with minimal conditions. South Africa’s competition tribunal on Tuesday gave Wal-Mart the go-ahead to buy a 51 per cent stake in Massmart provided the US retailer does not lay off any workers for two years. 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