Massmart-Walmart Deal In Danger

Massmart-Walmart Deal In Danger

It seems that road is tough ahead of the business association of the Massmart-Walmart, as opposition has grown against the deal. It’s being said that though Wal-Mart had assured that it would create as many as 15,000 jobs in South Africa within five years, there are very weak chances that it could actually happen.

As the news of the merger worth 16.5 billion-rand for a stake of 51% in Johannesburg-based retailer Massmart hit the contours of the community, words of opposition were being heard to derail the project, which could put the future of local retail chains into threat.

The issue has gone to such an extent that government has intervened appealing South Africa’s Competition Appeal Court to at least have a look at the business proposal between the parties involved else the local industry would get affected beyond repair.

Even the Competition Tribunal has asked the world’s biggest retailer to give an assurance that there won’t be any major reduction in jobs at least for the coming two years, but will it become a reality appears to be difficult. Moreover, the second condition produced said that Walmart would have to create a fund of 100 million-rand ($12.4 million) in order to provide sufficient support to local suppliers and manufacturers.

Though the government finds the conditions insufficient in front of the loss the country would have to face if the deal seams through, Wal-Mart has refused to accept the second clause clearly. Even Doug McMillon, Wal-Mart’s international Chief Executive Officer, has made to clear that the company cannot accept such conditions.

Even Heather Irvine, a Director at law firm Norton Rose, which represents the government, is of the opinion that the involved companies have managed to hide the necessary modalities of the deal in front of the tribunal and that’s the reason that tribunal has taken such a lenient stance.

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