S. Africans accept Wal-Mart's bid

JOHANNESBURG, South Africa - A South African retailer said Monday that its shareholders had overwhelmingly accepted Wal-Mart's offer to buy 51 percent of their company, paving the way for the U.S. giant to enter Africa.

The proposal was approved by 97 percent of Massmart shareholders who voted Monday - 75 percent had been needed. Wal-Mart Stores Inc. offered about $20 per share, or a total of about $2 billion.

The deal will have to be approved by South Africa's antimonopoly regulators.

Massmart chief executive officer Grant Pattison said once the deal goes through, Massmart would continue to operate the stores and be listed on the Johannesburg Stock Exchange; Wal-Mart will be the main owner of its shares.

Massmart runs about 290 big box, pharmacy, electronics, and other stores in 14 African countries. The big box stores are known as Makro.

Wal-Mart, of Bentonville, Ark., has 8,692 stores in 15 countries, among them Brazil, China, and India. But it has not until now ventured into Africa.

South Africa has the most developed economy on a continent slowly emerging from grinding poverty, and one that fared better than other parts of the world during the global recession. The consulting firm McKinsey & Co. has said global business cannot afford to ignore Africa's potential, including its growing middle class. The World Bank has said the continent is finally seeing the results of years of market reforms and investment in education and health care.

Business here has welcomed Wal-Mart's arrival as recognition of the potential of the continent's economy, and of the reach South African retailers have throughout Africa.

South African labor groups, though, contend the company is antiunion. Wal-Mart has pledged to respect existing contracts and committed to working with South African unions.

Sidumo Dlamini, president of the powerful Congress of South African Trade Unions, was at Massmart's Johannesburg headquarters for Monday's shareholders' vote. He said that while the approval was expected, he was disappointed.

The deal holds "nothing for the workers," he said. "We have empirical evidence from other countries where Wal-Mart is operating. It has never done anything for the workers."

Pattison, the Massmart CEO, said he had assured unions that no jobs would be lost and no contracts violated. And he said consumers would benefit from lower prices.

Gerard Heath, a businessman pushing a load of sugar and bulk-pack toilet paper out of one of Massmart's Makro big box stores Monday, said lower prices would be just one benefit. He hoped that African factories would find global markets for their products through Wal-Mart and that Massmart's local rivals would be pushed to improve service.

"It will make Africa a lot more competitive," Heath said.