Business Retailing The beast goes on safari
商业 零售业 巨兽出击
Can Wal-Mart make it in Africa?
FOUR billion dollars doesn't count as an "every day low price", but Wal-Mart, the world's biggest retailer, hopes it has found a bargain.
That is how much ($4.1 billion to be precise) the Arkansas-based "Beast of Bentonville" has offered to acquire Massmart, a retailer with 288 stores in 14 countries in sub-Saharan Africa.
On September 27th Massmart's management confirmed it is in exclusive negotiations to sell the South African-based firm to Wal-Mart.
The deal is being overseen by Andy Bond (pictured right), who ran Wal-Mart's British arm, Asda.
As Massmart's shares initially traded above the offer price, it suggests some investors think there may be other bidders, and that Mr Bond might have to come up with some more money to clinch the deal.
This is the clearest sign yet that Africa is now near the top of the agenda for the world's leading businesses.
The continent still has its problems, but it is no longer "hopeless"—as this newspaper once described it—especially for anyone wanting to be part of a fast-growing consumer market.
Last year, while the global economy struggled with the aftermath of the financial crisis, Africa as a whole continued to advance and is expected to grow by at least 4.3% this year.
Some economies, such as Nigeria and Ghana, are racing ahead.
As the middle class and urban working class expand rapidly, food consumption is expected to grow strongly, along with sales of other consumer products.
There had been speculation that Wal-Mart would go for Shoprite, a rival African retailer, but Massmart offers a lot of products besides food, which is more in keeping with the expanding range of products that Wal-Mart sells elsewhere.
Massmart operates under nine different names, including Dion Wired (an electronics retailer) and Builders' Warehouse (a bit like Home Depot).
Massmart旗下有九家分号，包括Dion Wired（一家电子产品零售店）和Builders' Warehouse（类似于家得宝）。
Wal-Mart, which has built its recent success on world-class logistics, is said to be particularly keen on Massmart's low-cost distribution system.
Initially, Massmart would be barely visible within Wal-Mart's global empire, which this year is expected to earn profits of around $14 billion on sales of $405 billion in more than 8,500 outlet under 55 different names in 15 countries.
It is the growth potential of Africa that is appealing, especially as sales have disappointed of late in America, even though Wal-Mart has been well-placed to benefit from consumers trading down.
Critics of the deal point out that some of Wal-Mart's international adventures have gone badly, most notably its expansion into Germany, which it eventually abandoned.
But there is a world of difference between the mature, highly competitive German market and using its global clout to shape an African market that is still in its infancy.
It will have to deal with unions, which have been agitating recently at Massmart, perhaps having got wind of Wal-Mart's potential offer.
But outside America, Wal-Mart is not the ideological enemy of organised labour that it is at home.
And it has thought sufficiently hard about social engagement—especially since it got green religion in the aftermath of Hurricane Katrina—that it knows it will need to view South Africa's black-empowerment laws as an opportunity not a cost.
Massmart's management is reportedly negotiating with the expectation of being retained after the acquisition, which seems plausible given their local knowledge and impressive track record. Mr Bond is certainly no good ol' boy from Arkansas.
But nor is Mike Duke, Wal-Mart's chief executive, who took the top job after heading its international operations.
The bid for Massmart is an attempt to gain a first-mover advantage by one of the world's most sophisticated companies, and it is likely to be seen as the moment when the beasts of the corporate world recognised that Africa is the next big growth market.
And what if it all goes wrong, as it might?
The great thing about being a big beast is that you can lose $4 billion and barely notice.