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AfricaAFRICA NEWSBusinessEastern AfricaNewsSouth AfricaSouthern AfricaWestern Africa

Massmart in talks to close Game stores in East, and West Africa

by Radarr Africa
written by Radarr Africa

South African retailer Massmart said on Wednesday that it had begun staff consultations about closing its Game stores in East and West Africa, after efforts to find domestic buyers for the stores failed.

Massmart Chief Executive Officer Mitch Slape said last year that it was in discussions to sell all its Game stores in Ghana, Nigeria, Uganda, Kenya and Tanzania to stem losses in that struggling part of its business.

“Massmart initiated a process over a 12-month period to investigate… the opportunity to sell our East and West African stores to local investors. Unfortunately, this initiative did not deliver a meaningful outcome,” the company said in a statement on Wednesday.

ALSO READ: Massmart begins shutting unviable Game stores across South Africa

Massmart has been posting losses and losing market share to bigger local rivals in South Africa, forcing majority owner Walmart to cut costs and invest more capital to turn the company around.

The US retail giant has signed a deal to begin buying the 47% stake in Massmart it did not already own.

Source: Moneyweb

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AfricaAFRICA NEWSBusinessNewsNigeriaSouth AfricaSouthern Africa

South African retailer, Massmart exits Nigerian Market

by Radarr Africa
written by Radarr Africa

South African retail giant Massmart has sold its Games Discount World stores in Nigeria.

The assets were sold to the controlling shareholder of PricePointe Wholesale Club, an organisation that operates a wholesale store in Lagos.

The value of the deal is unknown, but Massmart will make it the second exit by a South African company in less than two years, following the sale of Shoprite’s Nigerian subsidiary.

Massmart has been adjusting operations across Africa amid reported interest from American retail giant Walmart in the last few months .

Massmart Chief Executive Mitch Slape also recently said that the company is reviewing its store portfolio outside of Southern Africa as part of a turnaround plan to stabilise the business. The review has now resulted in the disposal of 14 stores across Ghana, Nigeria, Uganda, Kenya and Tanzania, Itznews reports.

BusinessDay reports that Slape told investors that the performance and the complexity of running those businesses is something that needed to be addressed. He added,

“We’ve commenced a formal sales process, we’re currently in discussions with potential purchasers to take on those stores.”

ALSO READ: Walmart launches offer to buy S.African retailer Massmart

After a 12-month period of evaluation and engagement with numerous parties, the sale of the Games Discount World stores in Nigeria to PricePointe Wholesale Club was completed.

Massmart believes that the PricePointe familiarity with regional market conditions will improve overall store performance. PricePointe Wholesale Club’s is also the purchaser of the Massmart assets in the four other countries.

Source: Legit.ng

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AfricaAFRICA NEWSBusinessEconomySouth AfricaSouthern Africa

Walmart launches offer to buy S.African retailer Massmart

by Radarr Africa
written by Radarr Africa

U.S retail giant Walmart Inc has launched a 6.4 billion rand ($377.6 million) offer to buy the remaining shares of South African retailer, Massmart. They bought the initial 51% in 2011 at R148.

The deal, if approved will delist Massmart which owns Makro, Game,and Builders Warehouse from the Johannesburg Stock Exchange.

Massmart shareholders will be offered R62 per share in cash. This is 53% higher than Massmart’s closing share price on Friday.

Walmart bought control of Massmart in 2010, which proved to be a disastrous deal. The value of its investment has slumped by 80% since then, as the retailer struggled in a weak economy with increased competition

In its half-year results, released on Monday morning, the company reported a large headline loss of more than R903 million, from a loss of R359 million in the same period last year. Sales grew almost 2% to R38.1 billion.

The US giant said that it has had to provide “increasing levels of support” to Massmart, including R4 billion in liquidity during the 2020 lockdown, over recent years. Walmart converted half of the R4 billion loan into equity.

Apart from Covid-19, the civil unrest in 2021 and flooding in KwaZulu-Natal earlier this year have compounded “weak consumer demand for general merchandise and an increasingly competitive operating environment”, Walmart said.

As part of its turnaround plan, the company plans to sell or close more of its non-core assets. While this will be crucial to the long-term strategy, it “will have a negative impact on the profit and loss of Massmart in the short term” and will require additional capital investment into the business, Walmart said.

The development of its e-commerce strategy will also require significant additional financial investment, the company said.

“The potential offer will enable Walmart to continue its overweight support as a long-term shareholder and allow eligible Massmart shareholders the opportunity to realise value now.

“With an expected inflow of foreign direct investment estimated at R6.4 billion, this potential offer, if finalised, represents a positive vote of confidence in South Africa by the world’s leading retailer,” Walmart said.

ALSO READ: Rebosis Property Fund goes into business rescue, suspends shares on the JSE

Massmart has established an independent board to review the terms of the offer. The independent board is advised by PwC. Based on a preliminary report, the independent board has already considered the offer and conditions as “fair and reasonable”, and will recommend the offer to the board.

In addition, shareholders representing almost 25% of Massmart shares have been canvassed and support the offer.

Massmart CEO Mitch Slape will step down from his role at the end of the year, with Jonathan Molapo becoming the new head of the company. Molapo was previously CEO of Astron Energy before joining Massmart last year.

Source: News24

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