American supermarket giant eyes Uganda - Daily Monitor

American supermarket giant eyes Uganda

Wednesday December 1 2010

By Walter Wafula


Uganda is likely to benefit from the acquisition of South Africa’s Massmart Holdings by Wal-Mart Stores, the giant American supermarket chain.

Through the acquisition, Wal-Mart is expected to extend its experience in connecting farmers with the supermarket’s global supply chain, boosting farmer incomes and help them improve the quality of their produce.

Massmart is a wholesale and retail company behind the Game store in Kampala, but with 287 others in 13 other African countries including; Tanzania, Nigeria, Malawi and Zambia.

On Monday, Wal-Mart formally announced that it was ready to acquire a 51 per cent stake in Massmart Holdings for Shs5.3 trillion or Shs47, 800 per ordinary share. Wal-Mart, the world’s leading supermarket chain by revenue, first announced its intention to buy Massmart on September 27, 2010.

Expand presence
Through the acquisition, the American firm is seeking to expand its global presence and tap into high growth markets like South Africa, Nigeria and Uganda, to bolster its sales and profitability.

This year, Massmart is expected to record up to $6.8 billion in sales from its four divisions including; Dion Wired (appliance and home entertainment specialist), Builders Warehouse, Builders Express, Builders Trade Depot (home improvement formats), Cambridge (food retailer) an, Jumbo Cash and Carry and the Shield buying group (food wholesalers).

Commenting on the prospect of investing in Massmart, Mr Doug McMillon, the president and CEO of Wal-Mart International, said; “This combination fits with our strategy to enter high growth markets in which we can apply our global expertise and generate strong returns.”

Massmart’s Chief Executive Officer Grant Pattison said the desire by Wal-Mart to do business in Africa is a vote of confidence in the strong growth potential of South Africa and the continent. “If approved, the transaction promises to be very positive for the regional economy, facilitating job creation, providing new opportunities for small and medium businesses and improving competitiveness,” Mr Pittison said in a statement on Monday.

While the Massmart board has welcomed the Wal-Mart bid, the firm’s offer remains subject to acceptance by Massmart’s shareholders, customary conditions and relevant regulatory approvals in South Africa. The earliest the deal can be concluded could be early next year.