( Massmart or the Company ) Registration number 2010/016839/07 ( Walmart )

Transcription

1 Massmart Holdings Limited Wal Mart Stores, Inc (Incorporated in the Republic of South Africa) Incorporated in the State of Delaware, United States of America Registration number 1940/014066/06 Traded on the New York Stock Exchange under the symbol WMT Share code: MSM Acting through its indirect wholly owned subsidiary ISIN: ZAE Main Street 830 (Proprietary) Limited ( Massmart or the Company ) Registration number 2010/016839/07 ( Walmart ) JOINT ANNOUNCEMENT OF A FIRM INTENTION BY WALMART TO MAKE AN OFFER TO ACQUIRE 51% OF THE ORDINARY SHARE CAPITAL OF MASSMART ON THE BASIS SET OUT IN THIS ANNOUNCEMENT AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. EXECUTIVE SUMMARY* 1 P age - The boards of directors of Massmart and Walmart are pleased to announce the terms of a recommended cash offer to be made by Walmart to acquire: 51% of Massmart ordinary shares, equivalent to 51 out of every 100 Massmart ordinary shares held, (excluding the Excluded Shares), by way of a scheme of arrangement; and 51% of the total entitlement to Massmart ordinary shares beneficially owned by the beneficiaries of the Employee Share Trust, the Thuthukani Trust and the BSS Trust, whether vested or unvested, restricted or unrestricted, by way of Private Treaty Agreements - Under the terms of the Offer, Massmart shareholders will receive R in cash per Massmart ordinary share sold to Walmart - The Offer represents a premium of approximately 19.2% to the volume weighted average price per Massmart ordinary share for the 30 days up to and including 23 September 2010, being the last business day immediately prior to the date of the first cautionary announcement - Massmart, following the implementation of the Offer, will remain listed on the JSE - The Massmart board has appointed Morgan Stanley as its independent financial advisor in terms of the SRP Code to consider the terms of the Offer and opine on whether or not the Offer is fair from a financial point of view to the holders of Massmart ordinary shares and the beneficiaries of the Employee Share Trust, the Thuthukani Trust, and the BSS Trust - Morgan Stanley has indicated that in its view the Offer is fair from a financial point of view - Accordingly, the Massmart board has resolved to support and to facilitate the Offer and the Substitute Offer, if made (subject to receiving a favourable fairness opinion in relation to the Substitute Offer) and therefore is recommending to Massmart shareholders that they vote in favour of all resolutions required to implement the Offer - Walmart has received irrevocable undertakings from certain institutional shareholders to vote in favour of, or to recommend to their clients to vote in favour of, the Offer in respect of Massmart ordinary shares representing approximately 35.2% of the existing issued ordinary share capital of Massmart *The definitions and interpretations used in this announcement apply to the Executive Summary section of this announcement.

2 2. INTRODUCTION Further to the cautionary announcements published by Massmart on 27 September 2010 and 28 October 2010, Massmart shareholders are advised that Walmart has delivered to the Massmart board of directors ( the Massmart board ) notice of its firm intention ( firm intention letter ) to make four inter conditional offers to acquire, subject to the conditions set out in paragraph 4 below: % of the total issued ordinary share capital of Massmart ( Massmart ordinary shares ), being 51 out of every 100 Massmart ordinary shares held (subject to rounding), from the holders of Massmart ordinary shares registered as such on the record date of the Scheme ( the Scheme Record Date ) ( the Scheme Shares ) by way of a scheme of arrangement in terms of section 311 of the Companies Act, 1973 as amended ( the Companies Act ) to be proposed by Walmart between Massmart and the holders of Massmart ordinary shares ( the Scheme ) but specifically excluding any Massmart ordinary shares beneficially owned by: 2 P age the Massmart Holdings Limited Employee Share Trust ( Employee Share Trust ); the option holders of options under the Employee Share Trust ( ESOP Option Holders ) as a consequence of the implementation of the provisions of the ESOP Addendum, as defined in paragraph 4.7 below (being the Massmart ordinary shares resulting from the exercise of 51% of both vested and unvested options) ( the ESOP Shares ); the beneficiaries of the Thuthukani Empowerment Trust ( Thuthukani Trust ) ( the Thuthukani Beneficiaries ) (which holds the Massmart A convertible redeemable non cumulative participating preference shares of 1 cent each in the issued share capital of Massmart ( Massmart A preference shares )) as a consequence of the implementation of the provisions of the Thuthukani Addendum (as defined in paragraph 4.7 below) (being the Massmart ordinary shares resulting from the deemed election to accelerate 51% of the vested and unvested allocation balance of the Thuthukani beneficiaries) ( the Thuthukani Shares ); and the beneficiaries of the Black Scarce Skills Trust ( BSS Trust ) ( the BSST Beneficiaries ) (which holds the Massmart B convertible redeemable non cumulative preference shares of 1 cent each in the issued share capital of Massmart ( Massmart B preference shares )) as a consequence of the implementation of the provisions of the BSST Addendum (as defined in paragraph 4.7 below) (being the Massmart ordinary shares resulting from the exercise of 51% of the vested and unvested allocation balance of the BSST Beneficiaries) ( the BSST Shares ); (collectively the Excluded Shares ); and 2.2. all of the ESOP Shares, the Thuthukani Shares and the BSST Shares by way of three private treaty agreements as further detailed in paragraph 5.2 below; (collectively the Offer ). The Offer will be made at a cash price of R per Massmart ordinary share to be acquired by Walmart ( the Offer Consideration ). The Offer is being made on the basis that, other than in the ordinary course of its business, Massmart will not declare or pay any dividends or declare or make any other distributions to the holders of ordinary and preference shares between 25 November 2010 and the operative date of the Scheme. Massmart shall be entitled to declare and pay an ordinary interim dividend for the six months ending December 2010, at levels consistent with prior years, on or after 14 March 2011.

3 The listing of Massmart s ordinary shares on the securities exchange operated by JSE Limited ( the JSE ) will continue, with trading and settlement taking place under a new International Securities Identification Number ( ISIN ), with effect from the commencement of business on the first business day following the last day to trade in order to participate in the Scheme. It is expected that Massmart will remain a constituent of the MSCI Emerging Market and FTSE JSE Top 40 Indices. Should the South Gauteng division of the High Court of South Africa ( the Court ) refuse to convene the Scheme meeting, or if the Scheme fails for any reason other than as a result of failure to receive of a regulatory approval (as contemplated in paragraph 4 below), Walmart shall be entitled (at its discretion) to make a substitute offer to holders of Massmart ordinary shares (excluding the Excluded Shares) by way of a general offer and which will incorporate an appropriate offer to the ESOP Option Holders, the Thuthukani Beneficiaries and the BSST Beneficiaries ( the Substitute Offer ). The firm intention letter has been countersigned by the Massmart board and no variation or amendment thereof will be binding unless reduced to writing and signed by Massmart and Walmart. 3. STRATEGIC RATIONALE 3.1. Walmart s rationale for the transaction The Offer is in line with Walmart s strategy to grow its international business by increasing its exposure to emerging markets with high growth potential. Walmart's core proposition is to save people money so they can live better, and this proposition has a strong appeal to consumers in emerging markets. Therefore, South Africa presents a compelling growth opportunity for Walmart and offers a platform for expansion into the rest of Africa. Within the South African market, Walmart sees Massmart as an ideal entry point into the region and a strategic fit with Walmart s global organisation. Walmart is attracted to Massmart s talented management team, cultural fit with Walmart, expertise in general merchandise, strong food and consumables business, multi format capability, and strong regional knowledge and experience Benefits to Massmart shareholders The Offer has the dual benefit of allowing Massmart shareholders the opportunity to realise an attractive premium on part of their investment at R per Massmart ordinary share in cash while affording them the opportunity to participate in the future value of the Massmart ordinary shares that remain listed on the JSE. The Massmart board believes that partnering with Walmart will assist Massmart in delivering its strategic vision of being the leading African retailer and thereby create significant value for Massmart shareholders over the long term. As the largest retailer in the world, Walmart is renowned for its operating, retailing, marketing and merchandising skills and its leading edge procurement and supply chain capabilities developed over many years of investing and trading across developed and developing countries. The Massmart board is confident that, with Walmart as a major partner, Massmart s organic growth prospects will accelerate and that overall execution risk of major initiatives will decline. Access to Walmart's experience and capabilities is expected to enable Massmart to implement its growth strategy more effectively and efficiently. Although the intention is that Walmart will not fundamentally change Massmart's current growth strategy, it will provide support and assistance to Massmart to enable it to implement its strategy with full effect. 3 P age

4 The boards of directors of Massmart and Walmart believe that the proposed transaction will create significant incremental value in the Massmart business through a combination of buying efficiencies, intellectual property, information systems, as well as technical, consulting and other support services Benefits to consumers, employees, suppliers and communities The proposed transaction contemplated in this announcement is expected to result in benefits to consumers, employees, suppliers and communities. Walmart's core proposition, as previously stated, is to save people money so they can live better. It is therefore anticipated that the proposed transaction will bring tangible benefits to consumers in South Africa and increasingly the rest of Africa. Walmart has extensive global experience and capabilities relating to general merchandise, fresh food and grocery retailing. By gaining access to Walmart's experience and capabilities relating to procurement and supply chain, particularly in relation to fresh food retailing, Massmart will be able to deliver a wider selection of quality products which are more consistently available to customers, and access advice and support on how to leverage store design capabilities to provide an even better consumer experience. Walmart is expected to benefit local suppliers in South Africa by continuing Massmart's practice of sourcing a significant portion of the products for its South African operations from local suppliers. Walmart also believes that by sourcing products directly from local farmers and suppliers will enable them to build direct, transparent relationships with Walmart. Walmart currently provides skills training to assist local producers to become more profitable, including advice on crop management and harvesting, as well as producing, sourcing and packaging. Furthermore, the transaction is expected to generate workforce benefits, thereby facilitating the broader socioeconomic imperatives of job creation and transformation in the South African retail sector. In this context, Walmart is aware and fully supportive of Massmart s Broad Based Black Economic Empowerment programme and expects to continue to build on these efforts. Walmart also intends to work diligently with appropriate parties to grow skills and further socio economic development initiatives. It is Walmart's policy to invest in skills development and technical training for its employees in all of the countries where it operates. This policy generally results in a better skilled workforce and increasing possible career opportunities for employees. The communities within which Massmart operates will continue to benefit from Massmart's recognised socially accountable behaviour, further enhanced by Massmart's access to Walmart's innovative social investment programmes including local initiatives focused on education and skills training and sustainable agriculture as well as global efforts addressing environmental sustainability, hunger and women s economic empowerment. 4. CONDITIONS PRECEDENT TO THE SCHEME The offers to be made to each of the Massmart ordinary shareholders, the ESOP Option Holders, the Thuthukani Beneficiaries and the BSST Beneficiaries as set out in paragraphs 2.1 and 2.2 above, are inter conditional (subject to the waiver provisions below). The Scheme will be subject to the fulfilment or, where applicable, waiver of the following conditions precedent ( Scheme Conditions ), which must be fulfilled by no later than six months after the date of posting of the circular to Massmart shareholders ( Scheme circular ) : 4.1. the Scheme having been approved by a requisite 75% majority of Massmart ordinary shareholders at the Scheme meeting present in person or by proxy, the Scheme being sanctioned by the Court and the order of Court sanctioning the Scheme being registered with the Registrar of Companies; 4.2. the receipt of regulatory approvals, to the extent required by law, in relation to the Offer and the Substitute Offer (if made), from all applicable regulators in South Africa and in any other country in which 4 P age

5 Massmart operates, including without limitation, the JSE, the Securities Regulation Panel ( SRP ), the competition authorities established under the (South African) Competition Act, 89 of 1998, and the Financial Surveillance Department of the South African Reserve Bank; 4.3. from the date of the firm intention letter referred to above until 17h00 (SA time) on the business day immediately preceding the finalisation date of the Scheme, no material adverse change having arisen in the business of Massmart. Material adverse change shall mean an adverse effect, fact, circumstance or any potential adverse effect, fact or circumstance which has arisen or occurred, or might reasonably be expected to arise or occur and which is or might reasonably be expected (alone or together with any other such actual or potential adverse effect, fact or circumstance) to be material with regard to the business, condition, assets, liabilities, operations, financial performance, net income and prospects of Massmart and/or any member of its group (whether as a consequence of the Offer or not); and/or any restrictive covenant or covenants or similar provision entered into by Massmart or any member of its group which may materially reduce the actual or potential value of Massmart or its group. To be material there should be an adverse impact of no less than R1.5 billion upon the value or potential value of Massmart and/or its froup, as the case may be or, if the adverse impact is upon Massmart's consolidated earnings before interest, tax, depreciation and amortisation (EBITDA), it shall be no less than 5% of the said EBITDA when measured against Massmart's 2010 EBITDA numbers. For the purposes of this definition, "value" shall include the value of assets and/or revenues and/or reserves without double counting where a single matter affects more than one measure of value; 4.4. where such consent is necessary, the consent for the proposed transaction contemplated in this announcement being obtained from the relevant counterparties to certain key contracts, as identified by Walmart during the due diligence review conducted by Walmart on the Massmart group. These consents relate primarily to "change of ownership" clauses in property leases, certain banking facilities and certain commercial agreements, which clauses are usual for agreements of that nature; 4.5. the approval by the holders of Massmart ordinary and preference shares of all resolutions required to successfully implement the Offer or the Substitute Offer (if made), including but not limited to the Whitewash Resolution (as defined in paragraph 5.4 below) and the resolution approving the execution of the ESOP Addendum (as defined in paragraph 4.7 below); 4.6. the SRP (a) accepting the Whitewash Resolution and waiving the requirements of Rule 8 of the Securities Regulation Code on Takeovers and Mergers ( SRP Code ) relating to the obligation for Walmart to make a mandatory offer to acquire shares in Massmart held by Massmart's minority shareholders; and (b) approving the offers to be made to the holders of the ESOP Shares, the Thuthukani Shares and BSST Shares; 4.7. the execution of the deeds of amendment to each of the ESOP Trust Deed ( ESOP Addendum ), the Thuthukani Trust Deed ( Thuthukani Addendum ), the BSS Trust Deed ( BSST Addendum ) and same becoming unconditional (save for any condition referring to the Scheme becoming unconditional); and each of (a) the SRP and (b) the trustees of each of the Employee Share Trust, the Thuthukani Trust and the BSS Trust agreeing in writing that no offer is required to be made by Walmart in respect of (i) the ordinary shares beneficially owned by the Employee Share Trust; (ii) options outstanding which are not exercised following the implementation of the provisions of the ESOP Addendum; (iii) the Massmart A preference shares; and (iv) the Massmart B preference shares (as applicable); 4.8. each of the agreements between (i) the trustees of the Employee Share Trust and Walmart (ii) the trustees of the Thuthukani Trust and Walmart and (iii) the trustees of the BSS Trust and Walmart ( the Private 5 P age

6 Treaty Agreements ) having been entered into by all parties thereto and becoming unconditional (save for any condition referring to the Scheme becoming unconditional); and 4.9. each of the inter company agreements (referred to in paragraph 9) between Massmart and Walmart having been entered into by all parties thereto. Walmart will be entitled to extend the date of fulfilment of any of the Scheme Conditions by 90 days in its own discretion upon written notice to that effect to Massmart, but shall not be entitled to extend the date to a date later than the aforesaid 90 day period, without the prior written consent of Massmart. Walmart will be entitled to waive in its discretion any of the Scheme Conditions upon written notice to the Massmart board prior to the date for fulfilment of the relevant Scheme Condition, provided that any waiver of the Scheme Condition recorded in paragraph 4.8 will require consent from the Massmart board. 5. PROPOSED MECHANICS OF THE OFFER AND CONTINUED LISTING OF MASSMART ON THE JSE The Offer will constitute an affected transaction as defined in section 440A(1) of the Companies Act and will be implemented as detailed below Massmart ordinary shareholders The Scheme The Offer in relation to the Scheme Shares will be implemented by way of the Scheme. Subject to the Scheme becoming operative, holders of Massmart ordinary shares on the Scheme Record Date (other than those holding the Excluded Shares) will be deemed to have disposed of their Scheme Shares in exchange for payment by Walmart of the aggregate Offer Consideration to Massmart. Massmart will administer and effect payment of the Offer Consideration to the scheme participants. Massmart ordinary shareholders will retain the balance of their Massmart ordinary shares, representing 49% of their shareholdings in Massmart ordinary shares on the Scheme Record Date (subject to rounding) The Substitute Offer Should the Scheme not be proposed or if the Court refuses to convene the Scheme meeting, or if the Scheme fails other than as a result of failure of a regulatory Scheme Condition, Walmart shall be entitled to make the Substitute Offer to the Massmart shareholders to acquire the Massmart ordinary shares (excluding the Excluded Shares) by way of a general offer in terms of Chapter XVA of the Companies Act on the same terms and conditions, mutatis mutandis, as the Scheme. The Substitute Offer will be conditional upon the Scheme Conditions set out in paragraphs 4.2 to 4.9 above, and additional conditions precedent that (i) an independent financial advisor appointed by the Massmart board forms a view that that Substitute Offer is fair from a financial point of view to holders of Massmart ordinary shares, the beneficiaries of the Employee Share Trust, the Thuthukani Beneficiaries and the BSST Beneficiaries and (ii) holders of Massmart ordinary shares tender that number of Massmart ordinary shares which would result in Walmart holding 51% of the Massmart ordinary shares after the implementation of the Substitute Offer. Should Walmart elect to make the Substitute Offer, an appropriate offer will be extended to the beneficiaries of the Employee Share Trust, the Thuthukani Beneficiaries and the BSST Beneficiaries on the same basis as contemplated in paragraphs 5.2.1, and of this announcement. 6 P age

7 If the Substitute Offer is made, all holders of Massmart ordinary shares will be able to tender all or any lesser number of their Massmart ordinary shares, but Walmart will only be obliged to accept tenders that will cause it to acquire 51% of the issued ordinary share capital of Massmart after the implementation of the Substitute Offer. Any Massmart ordinary shares tendered by holders of Massmart ordinary shares not accepted by Walmart will be returned to the relevant holders of the Massmart ordinary shares following the record date of the Substitute Offer. The shares tendered will be accepted on a pro rata basis and all holders will be treated equally Beneficiaries of the Massmart share trusts In terms of the Offer, the ESOP Option Holders, Thuthukani Beneficiaries and BSST Beneficiaries will be treated equally to Scheme participants in terms of the SRP Code and shall receive the same price per ordinary share as the Scheme participants. The details of the appropriate offers are set out below Employee Share Trust There are two types of beneficiaries under the Employee Share Trust, (i) beneficiaries who are registered holders of Massmart ordinary shares ( ESOP Shareholders ) and (ii) the ESOP Option Holders ESOP Shareholders ESOP Shareholders who hold unrestricted rights to sell their Massmart ordinary shares shall, subject to the Scheme becoming unconditional, become Scheme participants in respect of 51 of their Massmart ordinary shares for every 100 held (subject to rounding) on the Scheme Record Date. ESOP Shareholders who are restricted from selling their Massmart ordinary shares shall, in terms of a resolution passed by the Massmart board and subject to the Scheme becoming unconditional, have the lock in periods attaching to their Massmart ordinary shares amended to allow such ESOP Shareholders to release 51% of all their Massmart ordinary shares. This release shall occur such that the restricted ESOP Shareholders shall be Scheme participants and sell the released portion of their Massmart ordinary shares in the Scheme ESOP Option Holders Pursuant to the ESOP Addendum, the Massmart board and the trustees of the Employee Share Trust shall agree that, provided the Scheme becomes unconditional: ESOP Option Holders who have vested rights and are able to exercise their options ( vested ESOP Option Holders ) shall be deemed to have exercised 51% of all their vested options as at the finalisation date of the Scheme; ESOP Option Holders who have unvested rights and are not yet entitled to exercise their options shall be deemed to have accelerated and exercised 51% of all their unvested options as at the finalisation date of the Scheme; and the ESOP Option Holders shall be obliged to accept the offer by Walmart to acquire all of the ESOP Shares ( the ESOP Offer ). Any vested ESOP Option Holder may also elect, as he or she is currently entitled to do, to exercise his or her options prior to the deemed exercise referred to above, such that he or she will become a Scheme participant in the ordinary course. 7 P age Walmart will, in terms of the ESOP Offer, acquire the ESOP Shares on the operative date of the Scheme at a purchase price per share equal to the Offer Consideration. The terms of the ESOP Offer will be recorded in a Private Treaty Agreement to be concluded between Walmart and the trustees of the Employee Share Trust.

8 Thuthukani Trust 8 P age In terms of the Thuthukani Addendum and subject to the Scheme becoming unconditional, the Thuthukani Beneficiaries will be deemed to have elected to accelerate 51% of their vested and 51% of their unvested allocation balance and to have accepted the offer by Walmart to acquire the Thuthukani Shares ( the Thuthukani Offer ). Walmart will, in terms of the Thuthukani Offer, acquire the Thuthukani Shares, on the operative date of the Scheme at a purchase price per share equal to the Offer Consideration. The terms of the Thuthukani Offer will be recorded in a Private Treaty Agreement to be concluded between Walmart and the trustees of the Thuthukani Trust. In relation to Thuthukani Beneficiaries who have unvested rights, the Massmart board shall pass a resolution to allow such Thuthukani Beneficiaries, after the operative date of the Scheme, to transmit a distribution notice at any time for all or part of their remaining allocation balance, subject only to the trustees' prior consent, which shall not be unreasonably withheld. It is noted for completeness that the Massmart board has independently determined that the remainder of the allocation balance of the Thuthukani Beneficiaries (ie 49%) will become unrestricted subject to the Scheme becoming unconditional BSS Trust In terms of the BSST Addendum and subject to the Scheme becoming unconditional, the BSST Beneficiaries will be deemed to have elected to accelerate 51% of their vested and 51% of their unvested allocation balance and to have accepted the offer by Walmart to acquire the BSST Shares ( the BSST Offer ). Walmart will, in terms of the BSST Offer, acquire the BSST Shares, on the operative date of the Scheme at a purchase price per share equal to the Offer Consideration. The terms of the BSST Offer will be recorded in a Private Treaty Agreement to be concluded between Walmart and the trustees of the BSS Trust. The remainder of a beneficiaries allocation balance (ie 49%) will be unaffected Substitute Offer Should Walmart elect to make the Substitute Offer, an appropriate offer will be extended to the beneficiaries of the Employee Share Trust, the Thuthukani Beneficiaries and the BSST Beneficiaries Listing of Massmart ordinary shares on the JSE Application will be made to the JSE for the listing of the new Massmart ordinary shares to be issued in terms of the implementation of the ESOP Addendum and the issue of new Massmart ordinary shares as a consequence of the conversion of the Massmart preference shares, as contemplated in terms of the Thuthukani Addendum and the BSST Addendum Waiver of mandatory offer, including SRP waiver procedure In terms of Rule 8 of the SRP Code an "affected transaction" requires a mandatory offer to be made by Walmart in respect of all the Massmart shares. In terms of Rule 8 of the SRP Code, the requirement for a mandatory offer may be dispensed with by the SRP provided that a majority of the Massmart shareholders at a properly constituted meeting of the holders of relevant securities vote in favour of the resolution to waive their right to have Walmart make such a mandatory offer ( Whitewash Resolution ). Accordingly, Massmart shareholders will be asked at a general meeting to approve the Whitewash Resolution. The SRP has advised that it is willing to consider an application to grant dispensation to Walmart in terms of the SRP Code, which would have the effect of releasing Walmart from its obligation to make an offer for all the issued shares in the share capital of Massmart, subject to the SRP considering representations (if any) made by Massmart shareholders. Prior to granting a dispensation in terms of the SRP Code, the SRP will consider any objections or representations (if any) made by any Massmart shareholder. Accordingly, any Massmart shareholder who

9 wishes to object to the dispensation shall have 14 (fourteen) calendar days from the date of posting of the Scheme circular referred to in paragraph 17 below to raise such an objection with the SRP. Objections should be made in writing and addressed to the "Executive Director, Securities Regulation Panel" at any one of the following addresses: Physical: Sunnyside Office Park 1st Floor, Building B 32 Princess of Wales Terrace (off St Andrews Road) Parktown, 2193 Postal: PO Box Auckland Park Johannesburg, 2006 Telefax: (27) If any submissions are made to the SRP within the permitted timeframe, the SRP will consider the merits thereof and, if necessary, provide the objectors with an opportunity to make representations to the SRP. Thereafter, subject to the Whitewash Resolution having been approved at the general meeting, the SRP will rule on Walmart's application for dispensation. 6. FUNDING, CASH CONFIRMATION AND WALMART UNDERTAKING TO SRP The aggregate Offer Consideration will be funded through Walmart s existing cash resources and facilities. Walmart guarantees the obligations of Main Street 830 (Proprietary) Limited as principal. The SRP has received confirmation from N M Rothschild & Sons (South Africa) (Proprietary) Limited and JPMorgan Chase Bank, N.A., Johannesburg branch in accordance with Rules 2.3.2(b) and 21.7 of the SRP Code that resources are available to Walmart sufficient to satisfy in full the aggregate Offer Consideration. Walmart has undertaken to the SRP that it will not acquire Massmart ordinary shares at a price above the Offer Consideration, for a period of six months from the Scheme Record Date, unless it is required in order to ensure that Walmart does not dilute below the percentage of issued Massmart ordinary shares which it will hold immediately following the implementation of the Scheme and the Private Treaty Agreements. 7. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE OFFER ON MASSMART The table below sets out the unaudited pro forma financial effects of the Offer on Massmart s audited earnings, headline earnings, fully diluted earnings and fully diluted headline earnings per share, respectively, for the financial year ended 27 June 2010, as well as on the net asset value per Massmart ordinary share and net tangible asset value per ordinary share at 27 June 2010 assuming that the Offer is implemented. The pro forma effect of the Offer on headline earnings is a reduction of R301.1 million and included in this figure are: anticipated transaction costs, including advisors fees, totalling R194.3 million. These costs are not taxdeductible, are once off in nature and will be incurred in the 2011 financial year; an aggregate IFRS 2 Share based Payments charge of R118.9 million relating to the accelerated vesting of options as outlined in paragraph 5.2. This charge is once off in nature, and represents amortised charges that would have been incurred in future years but which are now accelerated and charged in the 2011 financial year; and other positive net adjustments of R12.1 million after tax. 9 P age

10 These pro forma financial effects have been prepared for illustrative purposes only and, because of their nature, may not fairly present the actual financial effects on Massmart. The Massmart board is responsible for the preparation of the pro forma financial information. Attributable earnings per Massmart ordinary share (cents) Headline earnings per Massmart ordinary share (cents) Diluted attributable earnings per Massmart ordinary share (cents) Diluted headline earnings per Massmart ordinary share (cents) Net asset value per Massmart ordinary share (cents) Net tangible asset value per Massmart ordinary share (cents) Number of Massmart ordinary shares in issue Weighted average number of Massmart ordinary shares in issue Diluted weighted average number of Massmart ordinary shares Notes and assumptions: Before the Offer Pro forma effect of the Offer After the Offer % change % % % % % % % % % 1. The Massmart financial information reflected in the Before column has been extracted from the audited annual results of Massmart for the year ended 27 June The financial effects on the net asset value and net tangible asset value have been based on the assumption that the implementation of the Offer was effective on 27 June The financial effects on the attributable earnings, headline earnings, fully diluted attributable earnings and fully diluted headline earnings per Massmart ordinary share, respectively, have been based on the assumption that the implementation of the Offer was effective on 1 July Included in the above is: a. the cost of accelerating 51% of the unamortised IFRS 2 charge at 27 June 2010, which is once off in nature.; b. the estimated transaction costs associated with the Offer, which is once off in nature; and c. the net STC impact on the dividends declared to external shareholders during the year as well as the reduction relating to the dividends associated with the Massmart A preference shares which were effectively converted to Massmart ordinary shares at the beginning of the year. 4. The change in weighted average number of shares represents the number of Massmart ordinary shares issued to give effect to the Scheme terms. This relates to the Employee Share Trust, BSS Trust and the Thuthukani Trust. 5. The weighted average number of shares is adjusted for the Massmart ordinary shares which would be issued in terms of the Scheme and which is included in the calculation for the full year. 6. The above results in a reduction of the dilutive effect of the weighted average number of options due to the implementation of the ESOP Addendum, the BSST Addendum and the Thuthukani Addendum. 10 P age

11 8. EFFECTS OF THE OFFER ON A MASSMART ORDINARY SHAREHOLDER The table below sets out the effects of the Offer on a Massmart ordinary shareholder: Before the Offer (Rand) The Offer Consideration (Rand) Premium (%) Closing price on 23 September 2010 (a) % 30 day VWAP to 23 September 2010 (b) % Closing price on 26 November 2010 (c) % 30 day VWAP to 26 November 2010 (d) % Notes: a) The before column reflects the closing JSE market value per Massmart ordinary share on Thursday, 23 September 2010, being the trading day immediately preceding the publication of the cautionary announcement regarding Walmart s potential offer. b) The before column reflects the 30 day volume weighted average JSE market value per Massmart ordinary share calculated for the 30 trading days up to and including Thursday, 23 September c) The before column reflects the closing JSE market value per Massmart ordinary share on Friday, 26 November 2010, being the trading day immediately preceding the publication of this firm intention announcement. d) The before column reflects the 30 day volume weighted average JSE market value per Massmart ordinary share calculated for the 30 trading days up to and including Friday, 26 November INTER COMPANY AGREEMENTS BETWEEN WALMART AND MASSMART Massmart and Walmart have agreed that as a condition to the Offer they will enter into inter company agreements on an arm s length basis which will govern, inter alia, Massmart: having access to Walmart s procurement capability through a Buying Agency agreement; being able to use Walmart s technical skills and services through a Technical and Consulting Services agreement; having access to and use of Walmart s information technology hardware and software through an Information Systems Division Services Support agreement; and making use of the full range of Walmart s retail, operational, supply chain, marketing and merchandise skills and intellectual property through an Intellectual Property Licence agreement. Further details on these agreements will be included in the Scheme circular. 10. BREAK FEE Subject to applicable law, Massmart undertakes that it will pay to Walmart an amount in South African Rands equal to 1% of the aggregate Offer Consideration (plus any VAT which may be payable in connection with the same) to compensate it for, inter alia, management time, reputational damages, costs, fees and other expenses incurred pursuant to the Offer (or Substitute Offer, if made): if, following the making of the Offer or the Substitute Offer, the Massmart board withdraws, or adversely modifies or qualifies, its recommendation of the Offer or the Substitute Offer as contemplated in paragraph 12; or 11 P age

12 10.2. if, following the making of the Offer or the Substitute Offer, the Offer (or the Substitute Offer) fails as a result of a higher offer being made and succeeding for the acquisition of 35% or more of the Massmart ordinary shares. 11. BOARD OF DIRECTORS AND MANAGEMENT The Massmart board To ensure that there is continuity and alignment of management between Walmart and Massmart post implementation of the Offer or the Substitute Offer, as the case may be, the parties have undertaken to procure that, as soon as may be practically possible: the Massmart board will be reduced from its current 13 members to nine members, which will comprise the current two executive directors and seven non executive directors, of which the majority will be independent; Walmart will be entitled to nominate: three non executive directors to the reconstituted Massmart board; and an appropriate number of directors on each of the boards of Massmart's material subsidiaries; the Massmart board will either have an independent chairman or an independent lead nonexecutive director, provided that the first chairman of the reconstituted Massmart board will be independent for a period of not less than 12 months following completion of the Offer or the Substitute Offer, as the case may be; and a Walmart nominated non executive director will be appointed to each of the key board committees of Massmart and its material subsidiaries, subject to applicable laws and regulations, including the Companies Act Management The emoluments of the Massmart directors and the service contracts in respect of Massmart s executive directors will not, save as contemplated below, change as a consequence of the Offer or the Substitute Offer (if made). Walmart has indicated that after the successful implementation of the Offer or the Substitute Offer (if made), it intends to support and continue with the existing mechanics to incentivise certain key members of Massmart s senior management and the executive directors through the Employee Share Trust, so as to ensure continuity and alignment for the purposes of: maximising shareholder value; and building the leading retail franchise in Africa. Details of how this will be achieved has not been finally agreed, but will include, subject to Massmart s and Walmart s executive remuneration approval processes, and disclosure in the normal course, incentivising those senior management and executive directors through the granting of new options in accordance with the existing terms of the Employee Share Trust (as has been done hitherto), at the first allocation date after the implementation of the Offer or the Substitute Offer, as the case may be (which is expected to be May 2011). 12. OPINIONS, RECOMMENDATIONS AND UNDERTAKINGS Morgan Stanley South Africa (Proprietary) Limited ( Morgan Stanley ) has been appointed independently to advise the Massmart board as to the fairness from a financial point of view of the terms of the Offer. Based on its independently performed procedures and subject to the matters set out in the Morgan Stanley letter, Morgan Stanley is of the view that, as at the date of the Morgan Stanley letter, the terms of the Offer are fair from a financial point of view to holders of Massmart ordinary shares, the Thuthukani Beneficiaries, the BSST Beneficiaries and the ESOP Option Holders. 12 P age

13 13 P age In the event that the Scheme is not proposed or fails and the Substitute Offer is made, the Massmart board will appoint an independent financial advisor to opine on the fairness of the Substitute Offer at that time. The Massmart board has considered the terms of the Scheme and the Private Treaty Agreements and has considered the opinion of Morgan Stanley, and is of the opinion that the terms of the Scheme and the Private Treaty Agreements and the Substitute Offer, if made (subject to receiving a favourable fairness opinion in relation to the Substitute Offer) are fair to Massmart ordinary shareholders, the Thuthukani Beneficiaries, the BSST Beneficiaries and the ESOP Option Holders, respectively. The Board: recommends that Massmart ordinary shareholders vote in favour of the Scheme and, to the extent that the Massmart board members are holders of Massmart ordinary shares, such Massmart board members undertake to vote in favour of the Scheme; undertakes to facilitate the Scheme to the extent that a board of directors will normally be required for purposes of the implementation of a scheme of arrangement in terms of the Companies Act; and recommends that all Massmart shareholders vote in favour of the requisite resolutions to be proposed at the general meeting, and to the extent that Massmart board members are holders of Massmart ordinary shares, such Massmart board members have undertaken to vote in favour of the requisite resolutions. 13. SHAREHOLDER SUPPORT Walmart has received irrevocable undertakings from certain institutional shareholders to vote in favour of or to recommend to their clients to vote in favour of, the Offer in respect of ordinary shares representing approximately 35.2% of the existing issued ordinary share capital of Massmart. In addition, the directors representing in aggregate 1.4% of the existing issued ordinary share capital of Massmart have undertaken to vote in favour of the Scheme and the resolutions to be proposed at the general meeting. 14. EXISTING HOLDING OF SECURITIES IN MASSMART As at the date of this announcement, Walmart does not own or control, or have the option to purchase, any securities in Massmart. 15. SPECIAL ARRANGEMENTS Save as set out in this announcement: no arrangements, undertakings or agreements have been made between Massmart and Walmart, or persons acting in concert with Massmart and Walmart, in relation to the Scheme Shares; and no arrangements or undertakings (including any compensation arrangements) which have any connection with or dependence on the Scheme exist between Walmart (or any person acting in concert with Walmart) and any director of Massmart or any person who was a director of Massmart within the period commencing 12 months prior to the operative date, or any person who is or was a holder of Massmart ordinary shares within the period commencing 12 months prior to the operative date. In November 2008, the four current black non executive directors of Massmart, being KD Dlamini, NN Gwagwa, P Langeni and DNM Mokhobo, each received Massmart ordinary shares at a price of 1 cent per share. In terms of contracts signed at the time, these shares could only be sold in equal tranches at the

14 third and fifth anniversaries of the initial sale. The Massmart board has resolved that each of the four nonexecutive directors may participate in the Scheme by selling 51% of their Massmart ordinary shares. In addition, should any of the current black non executive directors leave the Massmart board as a consequence of the reduction and reconstitution of the Massmart board (as contemplated in paragraph 11.1), those black non executive directors will be released from all restrictions and will be able to sell their remaining Massmart ordinary shares at their discretion. 16. DOCUMENTATION The Scheme circular providing further information on the Offer and containing a notice of general meeting, a notice of Scheme meeting, an order of Court, forms of proxy for each of the general meeting and Scheme meeting and a form of surrender and transfer will be posted to Massmart shareholders in due course as contemplated below. 17. IMPORTANT DATES AND TIMES The Scheme circular containing full details of the Offer (including all terms and conditions of the Scheme and the offers to Thuthukani Beneficiaries, BSST Beneficiaries and ESOP Option Holders) will be posted to Massmart shareholders on or about Thursday, 9 December 2010, following the Court granting approval to the convene the Scheme meeting. Shareholders should note the following important dates and times: Court grants approval to convene Scheme meeting Notice of Scheme meeting released on SENS on Notice of Scheme meeting published in the Business Day and Die Beeld on Notice of Scheme meeting published in the Sunday Times on Notice of Scheme meeting published in the Government Gazette on Last day to trade Massmart ordinary shares on the JSE in order to be recorded in the share register on the voting record date in order to be eligible to vote at the scheme meeting on Voting record date on which Massmart ordinary shareholders must be recorded in the Massmart ordinary share register in order to vote at the scheme meeting at 17h00 on Last day to lodge forms of proxy for the general meeting by 11h00 on Last day to lodge forms of proxy for the Scheme meeting by 10h30 on General meeting to be held at 10h00 on Scheme meeting to be held at 10h30 or 10 minutes after the adjournment or conclusion of the general meeting which precedes the Scheme meeting, whichever is later, on Results of the general and Scheme meetings released on SENS on Anticipated date for Walmart to receive formal dispensation from the SRP in respect of the Whitewash Resolution Results of the general and Scheme meetings published in the South African press on Scheme chairperson's report lies open for inspection from and including Court hearing to sanction the Scheme at 09h30 or as soon thereafter as Counsel may be heard on 2010 Thursday, 2 December Thursday, 9 December Thursday, 9 December Sunday, 12 December Friday, 17 December 2011 Thursday, 6 January Thursday, 13 January Friday, 14 January Friday, 14 January Monday, 17 January Monday, 17 January Monday, 17 January Tuesday, 18 January Tuesday, 18 January Wednesday, 19 January Tuesday, 1 February 14 P age

15 If the proposed scheme is sanctioned: Order of Court sanctioning the Scheme lodged for registration with the Registrar of Companies on or about Results of the Court hearing to be released on SENS on Results of the Court hearing to be published in the South African press on Finalisation date announcement to be released on SENS (subject to the fulfilment of all conditions precedent) on Finalisation date announcement to be released in the South African press (subject to the fulfilment of all conditions precedent) on Last day to trade Massmart ordinary shares on the JSE in order to be recorded in the share register on the Scheme Record Date on Massmart ordinary shares trade ex the Scheme consideration under a new ISIN. The Massmart JSE share code and abbreviated name remain the same Scheme Record Date to determine participation in the scheme at 17h00 on Operative date from which the Scheme consideration will be made available to certificated Scheme participants (if the duly completed form of surrender and transfer and the documents of title are received by the transfer secretaries on or prior to 12h00 on the Scheme Record Date, or failing that, within five business days of receipt of the duly completed form of surrender and transfer and relevant documents of title by the transfer secretaries) Certificated shareholders will have their replacement balance share certificates posted on, or within five days after Dematerialized Scheme participants will have their accounts held at their CSDP or broker credited with the Scheme consideration and updated with the balance of shares on the operative date, which date is expected to be Operative date of the Scheme, from the commencement of business on Notes: Wednesday, 2 February Wednesday, 2 February Thursday, 3 February Friday, 4 February Monday, 7 February Friday, 11 February Monday, 14 February Friday, 18 February Monday, 21 February Monday, 21 February Monday, 21 February Monday, 21 February 1. All times indicated above are South African times. 2. The dates and times are not final and are subject to the fulfilment of the Scheme Conditions, in particular, receipt of all regulatory approvals. Any change to the above dates and times will be agreed upon by Walmart and Massmart and advised to Massmart ordinary shareholders by notification on SENS and in the South African press. 3. Share certificates issued prior to Friday, 11 February 2011 under the old ISIN of ZAE may not be dematerialised or rematerialised after Friday, 11 February WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Massmart shareholders are advised that caution is no longer required when dealing in Massmart securities. Johannesburg 29 November 2010 Joint Financial Advisors to Massmart Deutsche Bank Goldman Sachs International Sponsor to Massmart Deutsche Securities (SA) (Pty) Limited Independent Financial Advisor to the Massmart board Legal Advisor to Massmart Edward Nathan Sonnenbergs Communications Advisor to Massmart Brunswick Independent Reporting Accountants to Massmart 15 P age