Wal-Mart, the world’s biggest retailer, may scale back its $4 billion bid for Massmart by nearly half, a move that could keep the South African firm listed in Johannesburg.
Wal-Mart is now considering taking more than a 50% stake, rather than a full buyout, Massmart said in a statement on Thursday.
The offer price was still R148 per share, Massmart said.
Shares of Massmart initially fell more than 2% on the news before recouping some losses.
The shares were down 0,5% at R140,76 as of 0909 GMT, underperforming a 0,8% gain in Johannesburg’s blue-chip Top-40 index.
Wal-Mart has been under increasing fire from its shareholders to revive its ailing US stores, and some analysts have said it should concentrate on fixing its business at home before spending big on expansion.
“Wal-Mart is investigating potential options for and the merits of retaining Massmart’s listing,” Massmart said.
“These investigations could lead to Wal-Mart making a partial offer to acquire in excess of 50%.”
The revised bid may also reflect dissatisfaction among Massmart’s shareholders at the deal, said Syd Vianello, an analyst at Nedcor Securities.
“I think what they are saying is: If this deal is so good for Wal-Mart why should we be selling?”
“I think because of an increasing, call it, resistance to exit completely it looks like they have to go the route of a partial offer and retaining the listing on the JSE so that shareholders will be allowed to maintain their exposure to the company.”
Wal-Mart last month said it was in talks to acquire all of Massmart, a $4 billion deal that would give the US retailer a big presence in fast-growing Africa and boost its emerging markets strategy.
The bid values Massmart at 26,3 times its 12-month adjusted earnings per share, according to Thomson Reuters data.
Massmart sells general merchandise, electronics and food via a low-margin, high-volume model. It runs nearly 290 stores and nine different retail and wholesale chains.
It has also been one of the most aggressive of South Africa’s retailers in expanding into the continent.
Wal-Mart’s intention to scale back its bid comes two weeks after HSBC pulled out of talks to buy a majority stake in South Africa’s Nedbank.