Research archive for MSM

Closer to home this type of activity is unlikely to attract investors of all types here in a hurry. I mean really, what is this about? State's court bid to undo Walmart merger. Is it just me who sees it this way? No, not likely. I tweeted yesterday: Dear anti WalMart people. Wake up. "Walmart: The Most Successful Retailer in History" Walmart: The Most Successful Retailer in History It is the consumer who decides!

Massmart are not holding back. They announced plans to buy The Fruitspot as part of its strategy to expand into its fresh food offering. It's a small transaction by Massmarts standards, we know this because the news was not released on SENS. This is because it is not deemed material enough. It is good to know however that they have their strategy and are wasting no time in implementing it.

OK, Massmart out with a sales update this morning, here goes my best copy paste job: "Shareholders are advised that the Massmart Group's total sales for the 52 weeks to June 2011 increased to R53.0 billion, representing growth of 11.7% over the prior 52-week period, with year-to-date deflation estimated at 1.3%. Comparable store sales increased by 5.2%." Seems decent enough, and what does make this a little more impressive is that inflation is a lot lower this year than in years gone by.

Sense prevailed and the world's biggest retailer, WalMart, was given the competition tribunal thumbs up with what seems like few restrictions to proceed with their 51 percent purchase of Massmart. I suspect that the very best way for us to get this across is to summarize the conditions:

Almost everyone that I have chatted to about the WalMart 51 percent purchase of Massmart has agreed that there has been serious regulatory overreach. But then again, all the people I chat to do not have a socialist agenda, nor do they live in a world clouded by ideology. Fact, WalMart employs more people in the US than any other organisation. The next biggest employer in the US is the postal service, which employs around 570 thousand folks. And postal service has been losing money as 44 cents for a letter just doesn't make sense anymore. I mean, you can post a letter from the Mexican border to the Alaskan wilderness for 44 US cents. Just been reading a Bloomberg Newsweek feature and they make that point.

The WalMart's slash Massmart hearing delays are irritating me. I was asked a direct question on the box, are these types of government interventions preventing foreign investors from taking a closer look at South Africa. I said yes, that is the short answer.

Massmart released their six monthly results, or to be more precise, they released their 26 week results to end 26 December. A sales increase of 13.3 percent to a whopping 27.3 billion ZAR for the half year was recorded. I remember when the group did just a little more than that for the full year, not so long ago. In living memory in this industry, it depends how old you are I guess. Some are old enough to remember 1987, and 1998 as dates that defined them, others 2001 and 2002 and more recently the period of great pity.

In case you missed it, the Competitions Commission has given the thumbs up to WalMart to take a 51 percent stake in Massmart. The official line from the Massmart SENS announcement is as follows: "Massmart shareholders are advised that on Friday, 11 February 2011, Massmart and Walmart received notification that the Competition Commission, in terms of section 14A of the Competition Act (Act 89 of 1998), had recommended to the Competition Tribunal that the Scheme be approved without conditions."

Shareholders of Massmart gave the WalMart deal the thumbs up yesterday. The court still needs to sanction the deal, but the main thing is that shareholders voted in favour. So there you go, they being WalMart have achieved gaining 51 percent of the company. As the official release said: "A further announcement regarding the results of the Court hearing and the final important dates and times for the Scheme will be released on SENS and published in the South African press after the Court hearing."

There was a sales update from Massmart yesterday indicating that the festive season was just right, not bad at all in fact. Here is another copy paste job:

OK, finally we have some news on the WalMart partial offer to acquire a majority stake in Massmart. WalMart want 51 percent of Massmart. I get the sense that the release says that, they probably want more, but all the "stakeholders" if not all the shareholders would have had other ideas. Government, labour, those sorts of folks, perhaps this is a middle of the road agreement that everyone is happy with. Check out the official announcement ---> Joint announcement of a firm intention by WalMart to make an offer to acquire 51% of Massmart.

One of our long recommended stocks, but basically a company that will fall aside when swallowed by Walmart, is Massmart. Or will they, more below this piece on sales. It is not even strange that they chose a similar sounding name. Massmart have a "state of the consumer" sales update for the 14 weeks to 3 October. Huh? Well guys, it is in the annual report, so they might as well make it known to the market. So, here goes:

What moved my Jozi markets? Massmart had a corker of a day, see below some more on that, dragging the rest of the retail sector much higher with it, the sector up 3.08 percent. Banks also had a cracker of a day, up nearly two and a half percent. The gold miners lost a little shine as the local currency firmed through the seven to one US Dollar mark. This as the Dollar continued to lose ground to the Euro. What a hoot, everyone was talking about Euro Dollar parity a mere half a year ago as the European woes escalated through the beginning of summer into June and beyond and now we sit with Euro Dollar cross at 1.346, having been over 1.35 yesterday. Back to Jozi, the local markets closed 244 points better to 28959, up around 0.85 percent.

It finally HAPPENED! Wal-Mart have made a bid for Massmart, our favoured retail stock. In the post results interview with CNBC Africa the chief of Massmart Grant Pattison suggested that the premium of a Wal-Mart type bid had been around for the better part of 18 months. Yip. True. And the stock has looked expensive for that long, but hey, don't fight with the market. Here goes the relatively thin on detail SENS announcement:

Massmart releases a sales update for the 52 weeks to 27 June 2010? And the outcome from the company release is a whopping: "R47.5 billion, representing growth of 10.1% over the prior year's 52-week period, with overall deflation estimated at 0.4%. Comparable store sales increased by 2.6%. Excluding African sales from both periods, the Group's total sales and comparable store sales increased by 12.1% and 4.5% respectively."