May 12, 2011 / 11:38 AM / 8 years ago

Massmart rival says could be squeezed by Wal-Mart

PRETORIA, May 12 (Reuters) - South Africa’s biggest grocer, Shoprite (SHPJ.J), warned on Thursday it would be forced to rely more on cheap imports if one of its rivals is taken over by U.S. discount retailer Wal-Mart (WMT.N).

South African competition authorities are hearing testimony until next Monday on whether to allow Wal-Mart Stores Inc to go ahead with its 16.5 billion-rand ($2.4 billion) offer for 51 percent of Massmart (MSMJ.J), a discount retailer.

The government and unions are concerned Wal-Mart’s global sourcing network would open the country to a flood of cheap Asian imports, undermining local suppliers and threatening jobs.

“For Shoprite to protect its image in South Africa, where it is known for cheaper prices ... there would be no other alternative but to import,” Gerhard Ackerman, Shoprite’s director of food buying and imports told the hearing.

Massmart currently sources about 60 percent of its products from domestic manufacturers and its chief executive, Grant Pattison, has said he is committed to continue using local suppliers.

Nevertheless, Pattison has also said the government could jeopardise the deal if it demands Wal-Mart meet local procurement targets.

Shoprite, which caters to the lower end of the retail food sector, has a market value of $7.9 billion, making it almost double the size of Massmart, which is worth about $4.1 billion. (Reporting by Tiisetso Motsoeneng and Mmathabo Tladi; Editing by David Dolan)

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