Wal-Mart (WMT) continues to await the decision of South Africa's Competition Tribunal on the potential 51% acquisition of South Africa's Massmart. With a decision imminent, it is looking good for Wal-Mart.
Local unions and government have expressed concern over the acquisition for two reasons:
- They are worried Wal-Mart's acquisition will lead to job cuts
- They are worried Wal-Mart's acquisition will hurt local suppliers as Wal-Mart imports products from outside South Africa
Wal-Mart has agreed to stipulations regarding job cuts, but will not agree to stipulations regarding product procurement.
The reason this is looking good for Wal-Mart is because the decision will be seen as a major test for possible future foreign investment into South Africa and any potential violation of international trade laws which South Africa has signed off on. As a member of the World Trade Organization (WTO), a country cannot demand a company buy products from specific suppliers as a condition on approval for an investment. This bodes very well for Wal-Mart.
I expect the deal to go through and Wal-Mart to start its long-term growth in this emerging market.