Wal-Mart Stores announced today (29 November) that it had offered US$2.3bn to acquire 51% of South African retailer Massmart Holdings.

The offer will give Wal-Mart a foothold into the African continent but comes two months after the world’s largest retailer announced it wanted to buy the whole of Massmart. After talks with Massmart shareholders, however, Wal-Mart has decided to scale back its bid and table an offer for a majority stake.

The US retail giant said today that it had offered ZAR148 a share for 51% of Massmart. The South African retailer said Wal-Mart had received irrevocable support from shareholders holding 35% of the company as well receiving non-binding support from other shareholders representing some 15% of Massmart’s existing issued share capital.

“We continue to be excited by the opportunity to invest in Massmart’s business and to accelerate its growth and expansion in South Africa,” said Doug McMillon, president and CEO of Wal-Mart international arm. “The more we learn about South Africa and the surrounding countries the more we are convinced that this is an important region with attractive growth characteristics. This combination fits perfectly with our strategy to enter high growth markets in which we can apply our global expertise and generate strong returns.”

However, Wal-Mart’s move is facing scrutiny in South Africa, with the country’s government setting up a panel to investigate the economic impact of the planned acquisition.

Wal-Mart executive vice president Andy Bond added: “In addition to supporting Massmart’s growth strategy, we believe Wal-Mart can drive meaningful value through enhanced buying efficiencies, enhanced distribution and logistics capabilities and sharing of global best practices in retail formats and information technologies.”

Massmart said independent financial advisor Morgan Stanley has reported that the terms of Wal-Mart’s offer are fair from a financial point of view.