Nobody can accuse Walmart of leaving the market in suspense. After tongues were set wagging by news of a potential offer, the American retail giant has now made a firm commitment at R62 per share.

Note from The Finance Ghost:

The deal has been structured as a scheme of arrangement with a standby general offer that kicks in if the scheme fails. This is interesting, as it means that Walmart is willing to increase its stake in Massmart even if it can’t reach a 100% shareholding and delist the company.

There is significant investment required for Massmart to achieve a turnaround in fortunes. The impact on short-term profitability is likely to be negative, so Walmart is making a significant commitment here. Understandably, that is easier in a private company rather than in the public eye.

PwC is acting as independent expert and has concluded on a preliminary basis that the terms are fair and reasonable.

Full details will be included in the offer circular that is expected to be posted on or about 23 September 2022.