Wal-Mart takes on Namibia watchdog over Massmart

By Servaas van den Bosch and Tiisetso Motsoeneng

WINDHOEK/JOHANNESBURG (Reuters) – Retailer Wal-Mart Stores (WMT.N: Quote, Profile, Research) is taking Namibia’s competition watchdog to court over conditions attached to its bid for control of South African group Massmart (MSMJ.J: Quote, Profile, Research).

The world’s biggest retailer is in the last stages of a $2.3 billion deal that would give it a 51 percent stake in Massmart, which operates in 14 African countries, including Namibia. Wal-Mart sees the purchase as a platform for further expansion on the continent.

But the acquisition is proving tough for Wal-Mart, which is already considering legal options to speed up a probe of its bid in South Africa after competition authorities there delayed a hearing by almost two months.

Now it could be taking legal action on two fronts.

“Wal-Mart launched an urgent High Court Application challenging the merger determination issued by the Commission,” Namibia’s Competition Commission said in a statement dated March 25.

Wal-Mart said in a statement it was seeking clarity in respect “of a condition that local ownership be required for Massmart’s current operations in Namibia, which consists of three stores.”

Namibia, like South Africa and Zimbabwe, has a black economic empowerment policy.

The deal, which needed competition approval in five countries excluding South Africa, has been given an unconditional nod in four — Tanzania, Malawi, Swaziland and Zambia, Massmart said in a e-mail to Reuters.

In South Africa, the transaction has drawn opposition from the government, which wants it either be blocked or have conditions attached.

South Africa’s Competition Tribunal postponed the hearings to May 9-16 after the government asked for more time to submit additional information.

LAST OBSTACLE

The tribunal is the last obstacle to Wal-Mart after shareholders overwhelmingly voted in favor of the deal in January.

The deal has pitted Wal-Mart, which has long tussled with organized labor in the United States, against South Africa’s powerful trade unions, some of which have threatened to strike against the U.S. group.

Wal-Mart, which agreed to pay 148 rand per share for the stake, said Massmart remained a compelling investment that would give it a substantial presence in South Africa and pave the way for further expansion across the continent.

The deal, if it goes ahead, would be Wal-Mart’s biggest acquisition since it bought British supermarket chain Asda in 1999.

Shares in Massmart (MSMJ.J: Quote, Profile, Research) were up 0.64 percent to close at 134.58 rand, below the 148 rand Wal-Mart offered in September last year.

(Editing by Alexander Smith)

Wal-Mart takes on Namibia watchdog over Massmart