South African Political Economy Insights: The Story of the Walmart–Massmart Merger

Abstract

It was a bright October morning in 2012, and Grant Pattison, CEO of Massmart Holdings, took time to look at the Sandton skyline out of his fifth floor office. It was almost two years, since US retail giant Walmart had given notice of its intent to buy a majority shareholding in Massmart. Pattison was amazed at how much had happened since then, and how much he had learnt through a merger process, which had become a protracted legal battle. The Competition Appeal Court had, however, just given its final ruling on the matter. Looking back, he wondered what he would have done differently, had he known that the approval process would not be plain sailing.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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Exhibit 2 Biography of Grant Pattison

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Grant Pattison graduated from the University of Cape Town (UCT) in 1992 with a BSc degree in electrical engineering, after which he was employed by the Anglo American Group as a management trainee. In 1993, after three-and-a-half years with Anglo American, Pattison moved to Monitor Group as a consultant.

A chance encounter in July 1998 with Massmart CEO, Mark Lamberti, in the reception at Massmart House paved Pattison's route to a career in retail with Massmart. He started his retail career in the role of executive assistant to the CEO, a position that he occupied for two years before being appointed managing director of Game Stores in October 2000. This was followed two years later with his appointment as group commercial executive in 2003. Pattison was appointed to the executive committee in 2000, to the board on 7 December 2004 and to the position of deputy chief executive officer on 1 July 2005. In July 2006, he became chief executive officer-designate and was appointed CEO of Massmart Holdings on 1 July 2007, nine years after joining the group.

With 12 years of experience working for Massmart, Pattison has a solid understanding of the group and has played an integral part in forming and leading its long-term strategy. This has included revitalising the group's private label programme and leading Massmart's entry into the retail food business.

Pattison was appointed as co-chair of the Consumer Goods Council of South Africa in 2009. He has played a fundamental role in streamlining the management of the organisation, resulting in a more focused and established foundation to ramp up the future quality and quantity of service to its members and customers.

In September 2010, Massmart received a non-binding expression of interest from Walmart involving a cash offer of R148 per share for the issued share capital of the company. This resulted in a process during which Pattison led discussions with Walmart which, in November 2010, resulted in a firm offer from Walmart to acquire 51% of Massmart at a cash price of R148 per Massmart ordinary share.

Pattison subsequently provided the executive leadership necessary to navigate the acquisition through the competition approval process, involving competition authorities in South Africa. The Walmart–Massmart merger was ultimately approved.

Source: Biography provided by Grant Pattison.

Exhibit 3 Biography of Judge Dennis Davis

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Judge Dennis Davis was educated at Herzlia School and the universities of Cape Town (UCT) and Cambridge. He began teaching at UCT in 1977 and was appointed to a personal chair of commercial law in 1989. Between 1991 and 1997, he was director of the Centre for Applied Legal Studies of the University of the Witwatersrand. He held joint appointment at Wits and UCT from 1995 to 1997. He was appointed a judge of the High Court in 1998 and as president of the Competition Appeal Court in 2000. Since his appointment to the Bench, he has continued to teach constitutional law and tax law at UCT, where he is an honorary professor of law.

Dennis was a member of the Commission of Enquiry into the Tax Structure of South Africa and was a technical advisor to the Constitutional Assembly, where the negotiations for South Africa's interim and final constitutions were formulated and concluded. He hosted a TV programme, Future Imperfect, an award-winning current affairs programme, between 1993 and 1998.

He has been a visiting lecturer/professor at the universities of Cambridge, Florida, Toronto and Harvard.

Source: University of Cape Town Department of Commercial Law (n.d.). Judge Dennis Davis. Available from: http://www.commerciallaw.uct.ac.za/staff/academic/ddavis

Exhibit 4 Biography of Rob Davies

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Rob Davies, a member of parliament since 1994, was a member of both the African National Congress (ANC) and the South African Communist Party (SACP) while living in exile in Mozambique between 1979 and 1990.

On his return to South Africa in August 1990, Davies worked in the Department of Economic Policy at the ANC headquarters in Johannesburg. He also worked as a professor and co-director for the Centre for Southern African Studies at the University of the Western Cape (UWC). During this period, he undertook policy research for the ANC and the Southern African Development Community (SADC).

Davies was a member of the South African ministerial delegation to the World Trade Organisation (WTO) in 1999, 2001, 2003 and 2005.

He holds an honours degree in economics from Rhodes University, a doctorate in political studies from the University of Sussex, and a master's degree in international relations from the University of Southampton.

Source: South African Government Information (n.d.). Minister of Trade and Industry. Available from: http://www.info.gov.za/leaders/ministers/tradeind.htm

Exhibit 5 Biography of Ebrahim Patel

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Ebrahim Patel came from a working-class family on the Cape Flats, where his mother, a garment factory worker, had been the family's sole breadwinner. He completed high school in 1979 as one of the top 10 matriculants nationally. Patel embarked on a degree at the University of the Western Cape, on scholarship, but his studies were delayed because of his political activity. After being detained several times, he ended up completing his degree part time through the University of Cape Town (UCT) in 1982 while working at the Southern Africa Labour and Development Research Unit (SALDRU), the research division of UCT's School of Economics.

Patel's career in organised labour started in high school: he led the student boycott of Fatti's and Moni's products during a seven-month worker strike at the pasta factory in 1979. This strike, a victory for the factory workers, was a milestone in the history of organised labour in South Africa and heralded a new era in coloured-African worker unity and community solidarity. It was also the start of a rolling wave of strikes that swept the country in the following years.

From 1983, while working at UCT, Patel unionised fellow workers, was elected a shop steward at the university and led negotiations on wages and working conditions. He was elected general secretary of the union, and later took part in the debates and meetings that led to the formation of COSATU in December 1985. Patel also helped organise the nationwide anti-apartheid general strikes and stay-aways that rocked the country during the 1980s and 1990s.

When the Southern African Clothing and Textile Workers Union (SACTWU) was formed in 1989, Patel served in a number of positions in that union, eventually ending up as general secretary in 1999, a position that he held until 2009.

Sources: Wikipedia (n.d.). Ebrahim Patel. Available from: http://en.wikipedia.org/wiki/Ebrahim_Patel; and South African Government Information (n.d.). Ministers. Available from: http://www.info.gov.za/leaders/ministers/.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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