Walmart offers $4 billion for South Africa's Massmart

JOHANNESBURG (Reuters) - Walmart offered more than $4 billion for South African wholesaler Massmart on Monday as the world's largest retailer seeks to expand in fast-growing Africa.

Massmart , South Africa's third-largest listed store group by value, owns chains such as Game and Makro and has been among the most aggressive South African outlets in expanding into the rest of sub-Saharan Africa, operating in 14 countries.

There had long been speculation that Walmart would try to expand in Africa with Massmart seen as a likely target.

The two companies said Walmart had offered 148 rand per share for Massmart, valuing it at 28.9 billion rand ($4.1 billion) or a premium of nearly 10 percent over the share price at Thursday's close of 134.75 rand.

Massmart said it had granted Walmart an exclusivity period, adding there could be no certainty the discussions would lead to a formal offer being made.

"It's a big vote of confidence for the South African retail economy and for South Africa," said Syd Vianello, an analyst at Nedcor Securities.

"It also has lots and lots of pricing and competition implications for the South African retail industry. Walmart is the world largest retailer, it can source products cheaper than anyone else in the world."

Massmart has nearly 290 stores, where the emphasis is on high volumes and low margins. By market capitalization, it is South Africa's third biggest listed store group after Shoprite Holdings and clothing retailer Truworths .

Shoprite had also been seen as a potential target for Walmart, which has over 8,600 retail units around the world.

Massmart shares are up more than 50 percent in the year to date compared to a rise of more <.JGERE> than 36 percent in the South African retailers index and a rise of little over 2 percent in the broader market <.JTOPI>.

(Editing by Matthew Tostevin)

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