US giant Walmart  now has enough green lights to buy half of Massmart .

Catch up on the deal progress at http://info.massmart.co.za/

But is the price right?

Right now, the Massmart share trades at ~144, and the Walmart purchase is at 148. What trading performance from here onwards is needed to make this a great buy for Walmart (or for a little independent investor).

Look at this pdf sheet - it may be fairly sobering:-  7 driver value model (two stage growth) - MASSMART

(the working, editable, excel sheet is only available in the TTK1 Model portfolio group )

Here is an extract...

It seems that the current price makes sense if, and only if:-

Sales grow smoothly at 19% .   In the update for H1 2011 Massmart SENS notice , it seems that sales grew at just 13.3%, of which 5.7% was from new store openings. That makes it even harder to hit the 19 needed.

PBT margin widens to 5.5% and never slips

Working capital (a negative amount for Massmart) widens to -3.5% of turnover (Walmart may get this right, playing hardball with suppliers)

And see how the RONA (return on net assets) has to climb like a Concorde, for ever, in this scenario.

Good luck from here on out, Massmartians

Stuart