New Obstacle for Wal-Mart in S. Africa Deal

May 17, 2011  |  

(Wall Street Journal) — Wal-Mart Stores Inc. threatened Monday to walk away from a proposed $2.4 billion merger with South African retailer Massmart Holdings Ltd. if procurement conditions are imposed after recommendations by the country’s competition commission.  The latest obstacle comes after the commission listened to evidence from the independent Competition Tribunal of South Africa and concluded that recent job losses at Massmart were linked to the merger and recommended that if it gets approved, Wal-Mart must rehire the 503 workers that were laid off. It also recommended that Wal-Mart be forced to honor union agreements for three years and sign on to conditions for its purchasing pacts.  The commission previously had said it would give its unconditional approval to the merger, which would see Wal-Mart get a 51% stake in the South African company.  “We cannot accept procurement conditions,” the legal team representing the companies said on the final day of the tribunal hearing Monday. “It will force the merging parties to appeal the conditions or walk away from the deal if imposed.”

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