Today is the last day for investors to buy Massmart shares if they want to participate in the scheme in which Walmart will buy 51 percent of the JSE-listed retail group.
Yesterday Massmart’s shares closed 0.14 percent higher at R142.20. Those who own shares by the close of trade today will be paid R148 a share by Walmart for 51 percent of their holdings.
The JSE said yesterday that Massmart would continue to be part of key indices, including the FTSE/JSE Africa Top40 with unchanged shares in issue of 203 595 118 and a decreased investability weighting of 50 percent. Its free float would therefore be lower. This is effective from tomorrow.
Brian Leroni, the corporate affairs executive at Massmart, said shareholders participating in the scheme would be confirmed by Friday, June 17. This was due to the JSE and Strate system, which only updated trades on the system five working days after trade.
Doug McMillon, the chief executive of Walmart International, said recently that Walmart was liaising with the National Treasury and the Reserve Bank regarding bringing funds into the country to pay shareholders.
But many shareholders are offshore.
Syd Vianello, an analyst at Nedbank Capital, said yesterday that prior to the deal with Walmart being concluded, Massmart’s free float was 100 percent, but subsequent to Walmart acquiring 51 percent of the business, it would fall to 49 percent.
Currently, 75 percent of Massmart is held by foreigners. Once the deal is done, these shareholders, along with all the others, will have their stakes in Massmart halved.
Existing foreign shareholders will own about 37 percent of Massmart.
With Walmart’s 51 percent stake and other foreign shareholdings at 37 percent, foreigners will hold 88 percent of Massmart once the deal is finalised.
Vianello said despite this, the free float of Massmart at 49 percent would still be high and the stock would have “pretty good tradeability”.
The issue of how liquid the stock would be rested on whether institutional shareholders, both locally and abroad, wanted to sell their stock. “If they have been happy to own Massmart shares for a length of time before the transaction there is no reason they would want to sell, at least in the short term, after the transaction because the fundamentals have not changed.”
Asked whether Walmart would look to increase its stake in Massmart, given that initially it wanted to buy 100 percent, Vianello said “anything could happen”. But Walmart would want to bed down the transaction first and be confident that it could work with Massmart’s management.
“I don’t expect any plans to increase its stake at least for a year.”
Walmart ran into opposition from major shareholders with its initial plan to buy the business outright as shareholders wanted to retain an interest in Massmart. But Vianello said fund managers very often had a time frame on an investment and might decide at a particular time that it had run its course and another investment was more promising.
“Walmart being a patient investor will wait for that to happen,” Vianello said. - Business Report