If successful, the Massmart/Walmart deal, which we are pleased to call “Wakro”, after the tradition of “TomKat” and “Brangelina”, will be signed and sealed in a brisk five months or perhaps a touch more. First off for Wakro, which is currently in the endearingly awkward “nonbinding offer” stage, is a two-to-three month due diligence, a process according to one insider of “counting stores and tins” to confirm publicly available information. For Walmart, a big drawcard is Massmart’s expanding footprint and sound strategy in Africa, with an expected surge in middle-income African households from 59million in 2010 to 128million by 2020. For Massmart, Walmart’s buying power and supply chain knowledge and infrastructure would have been interesting, with the Big Feller’s 4,110 stores in 14 countries outside the US. That, and a cracker of a price for shareholders – at R29.8billions for the business it is better than 10% per share on last Friday’s closing price, and the shares were already trading at a premium in anticipation of something like this happening. For suppliers, that supply chain expertise might prove a challenge initially: Walmart’s own systems are so efficient that suppliers in the US have a 30-second delivery window, with dire consequences for those who fail to make it.
Comment: So here it comes, at last. Massmart will be missed from the JSE, although the significant majority of its shareholders weren’t from these parts anyway. For more on this very important story look here.