Massmart, the third-largest retailer in South Africa by value will soon pull out operations from Zimbabwe and will join hands with Wal-Mart, the largest departmental chain in the US for a $4 billion deal.

Zimbabwe’s government has published certain regulations that would compel the foreign-run firms to sell 51% of their stocks to the black owners. This is the reason why Massmart is planning to reconsider its position in the Zimbabwe markets. If the country moves forward with the strategies outlines by the government, then the Massmart has no other option left than merging with Wal-Mart to keep up its business.

Grant Pattison, CEO of Massmart said in an interview given to Reuters, “Should the indigenization act be implemented in its current format, Massmart will have to reconsider its position in Zimbabwe."

Investors have raised their eyebrows after hearing this news as any Merger & Acquisition (M&A) or stock sale activity is going to impact their earnings.

Massmart, at present, runs two of its own stores called Marko discount stores in Zimbabwe. However, the retailer does not consolidate them into its fiscal results.
Meanwhile, Wal-Mart is planning to expand in the African markets by using this golden opportunity and has offered $4 billion deal to Massmart.