Coali­tion curbed

Unions lose at­tempt to block Wal­mart’s bid to buy SA’s gi­ant re­tailer

Finweek English Edition - - COMPANIES & MARKETS - ANDILE MAKHOLWA andilem@fin­

IF LAST MON­DAY’S de­vel­op­ments are any­thing to go by, the “anti-Wal­mart coali­tion” – led by re­tail trade union Sac­cawu and backed by South Africa’s biggest labour fed­er­a­tion, Cosatu – has ef­fec­tively lost its bid to block United States re­tail gi­ant Wal­mart Stores from ac­quir­ing lo­cal coun­ter­part Mass­mart Hold­ings. At a spe­cially con­vened Mass­mart share­hold­ers’ meet­ing last week, Sac­cawu wasn’t only un­able to win a sin­gle in­sti­tu­tional share- holder to vote against the deal but also couldn’t mo­bilise its own mem­bers to picket out­side the re­tailer’s head of­fice as planned. The protest was can­celled at the 11th hour be­cause Sac­cawu’s mem­bers didn’t show up, ap­par­ently be­cause Mass­mart threat­ened to dis­miss em­ploy­ees who joined the picket. Mass­mart CEO Grant Pat­ti­son de­nied that.

What­ever the case, Sac­cawu and its al­lies – in­clud­ing Geneva-based UNI Global Union 1,2%. Mass­cash – its cash and carry di­vi­sion – grew by 12,4% (com­pa­ra­ble: 4,2%) with de­fla­tion of 1,3%. A sur­pris­ing per­for­mance was recorded by its home im­prove­ment and build­ing ma­te­ri­als di­vi­sion Mass­build, which grew sales by 18,6% (com­pa­ra­ble: 11,8%), with in­fla­tion at 0,3%.

“Mass­build is very in­ter­est­ing. We sus­pect peo­ple for a while de­layed main­te­nance on their houses. Now they’re be­ing forced to fix the toi­let, paint the wall, re­place the car­pet,” says Mass­mart CEO Grant Pat­ti­son. “We’re see­ing a lit­tle bit more home main­te­nance than build­ing new houses. I also think in that di­vi­sion we’re do­ing bet­ter than our com­peti­tors and our mar­ket share is in­creas­ing. I don’t think the home im­prove­ment mar­ket is grow­ing as fast as Mass­build. We’re run­ning ahead of the mar­ket.”

Mass­build is a fairly new di­vi­sion within Mass­mart, grow­ing out of ac­qui­si­tions against crit­i­cism that a build­ing ma­te­ri­als chain doesn’t fit quite well within Mass­mart.

Its re­tail brands in­clude Builders Ware­house and Builders Ex­press. and the North Amer­i­can United Food and Com­mer­cial Work­ers’ In­ter­na­tional Union (UFCW) – ap­pear strug­gling to com­ple­ment their vo­cal op­po­si­tion of the in­tended deal with tan­gi­ble ac­tion. Which begs the ques­tion: Had the coali­tion any strong case to thwart the deal in the first place or was it just a mat­ter of those with money speak­ing louder?

The coali­tion has cited Wal­mart’s rep­u­ta­tion of anti-union ten­den­cies as its main con­cern. It has ar­gued that the deal would re­sult in job losses and reck­ons Wal­mart – the world’s biggest re­tailer – kills lo­cal in­dus­tries by bul­ly­ing sup­pli­ers to sell goods at cut­throat prices.

How­ever, Pat­ti­son says – con­trary to fears of job losses – Mass­mart’s plans to open up to 150 stores over the next three years, which would cre­ate be­tween 100 and 500 jobs/out­let opened. Those are plans Mass­mart hopes to im­ple­ment more quickly with Wal­mart on board.

Cosatu first deputy pres­i­dent Ty­otyo James says the coali­tion isn’t dis­cour­aged that 97,67% of the 80% voted shares ap­proved Wal­mart’s of­fer to ac­quire 51% of the South African re­tailer. James is adamant the coali­tion will bounce back strongly at the Com­pe­ti­tion Tri­bunal hear­ing, the next stage in the deal.


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