FINANCE

Walmart sells majority stake of Brazilian business

BY Deena M. Amato-McCoy

Walmart has entered into a new international deal, the company’s latest move to reshape its global portfolio.

The discount giant has sold an 80% stake of Walmart Brazil to private equity firm Advent International. Upon completion of the deal, Walmart will retain a 20% stake in the company.

Through the transaction, Walmart expects to record a non-cash, net loss of approximately $4.5 billion in the second quarter. A significant portion of the net loss is due to the recognition of cumulative foreign currency translation losses. The final loss could fluctuate significantly due to changes in currency exchange rates up to the date of close, according to Walmart.

The deal, which is subject to regulatory approval in Brazil, is expected to close later this year. The transaction value was not disclosed.

Advent has a strong local presence and extensive experience in retail investment both in Brazil and internationally. It has completed 75 investments in 22 countries. The company help the discounter to grow the division, according to Walmart.

“Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world,” said Enrique Ostale, executive VP and CEO of Walmart UK, Latin America and Africa. “We will retain a stake in Walmart Brazil and continue to share our global retail expertise, giving our Brazil business the best opportunity for long-term growth, providing opportunities for associates and low prices for customers.”

This is Walmart’s third international deal in two months. In April, the discount giant announced plans to sell its wholly-owned U.K. subsidiary, Asda Group Ltd., to J Sainsbury PLC in a deal valued at about $10 billion. Under the terms of the agreement, which is subject to various approvals, Walmart would hold a 42% share of the combined business.

In May, Walmart signed a definitive agreement to buy an initial stake of approximately 77% in Indian e-commerce firm Flipkart for $16 billion. Later that month, SoftBank Group Corp. said it would sell its roughly 20% stake in Flipkart to Walmart. While the company didn’t disclose terms of the sale, SoftBank’s investment in Flipkart was worth around $4 billion.

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