Africa News blog

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Shopping in Africa

September 28, 2010

SAFRICA-WALMART-MASSMART/A few weeks back it was HSBC announcing news of its talks for South Africa’s Nedbank. Now it is the world’s biggest retailer, Wal-Mart, seeking a foothold on the continent with a plan to buy South Africa’s Massmart for more than $4 billion.

The idea of Wal-Mart bidding for one of South Africa’s retailers had been around for a while as it focuses on international growth.

“South Africa presents a compelling growth opportunity for Wal-Mart and offers a platform for growth and expansion in other African countries,” said Andy Bond, executive vice president with responsibility for Wal-Mart’s operations in the region, including the UK and Africa.

The expansion in the rest of Africa is key. Massmart doesn’t only have a presence in South Africa, it also has stores in 13 other countries in sub-Saharan Africa.

It could be a hugely significant deal from an African perspective.

While there have been plenty of acquisitions in mining and energy and while multinational telecoms firms and brewers have their footholds, chains of shops are different.- and much more a bet on a class with a bigger disposable income.

Some have questioned the price Wal-Mart is offering for Massmart – even if it’s not much for a company with a market capitalization approaching $200 billion.

Could it be that those who aren’t in Africa in the years to come end up paying the higher price?

Picture: A shopper leaves a Massmart-owned store in Johannesburg. REUTERS/Siphiwe Sibeko

That is Wal Mart’s biggest Acquisition in ten Years and it is in Africa. India Inc via Bharti Airtel completed the Zain Africa Acquisition and that was the 2nd biggest Acquisition by India Inc. ever. We have crossed an Inflexion Point and the Trickle of International Money set to become a Land Grab and a Deluge.

There is a 1st Mover Advantage.

Aly-Khan Satchu

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