Wal-Mart moves into Africa with £1.5bn bid for retailer

Wal-Mart, which owns Leeds-based Asda, is keen to expand across Africa.

Discount retailer Massmart said a tie up with Wal-Mart will help speed up its expansion in sub-Saharan Africa.

The deal could pit 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's chief executive, Grant Pattison, said the company would retain its South African management and local identity after the deal.

"What isn't going to happen is a bunch of Wal-Mart people around here start running the company," he said. "South African management will continue to manage the business."

The two companies said in a joint statement that Wal-Mart will take a 51 per cent stake in the South African discount retailer. That values the deal at 1.47bn.

Wal-Mart's bid was first announced in September. But since then it has scaled back its plans from a full scale takeover to the acquisition of just over 50 per cent, giving it a controlling stake.

While Wal-Mart will gain control of the firm, it has promised to keep it listed in Johannesburg, which may have been critical in getting a go-ahead from South African authorities.

South Africa's government last year scuppered a $24bn tie-up between local telecom MTN Group and India's Bharti Airtel on concerns that MTN would lose its local listing.

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

Wal-Mart has received "irrevocable undertakings" from institutional shareholders holding 35.2 per cent of Massmart shares. In addition it has received non-binding letters of support from shareholders holding 15 per cent.

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

The deal comes under Mr Bond's remit as Wal-Mart's vice president for the UK and Africa.

Massmart is the leading African retailer of general merchandise, home improvement equipment and basic foods.

The company runs 290 stores in 13 countries in Africa, with the vast majority of its stores in South Africa.

Commenting on the deal, Mr Bond said: "South Africa presents a compelling growth opportunity for Wal-Mart and offers a platform for growth and expansion in other African countries.

"South Africa possesses attractive market dynamics, favourable demographic trends and a growing economy."