Walmart Sells Majority Stake in Underperforming Brazil Division

Walmart Sells Majority Stake in Walmart Brazil
The deal to shed its majority stake in Walmart Brazil is the third international deal that Walmart has struck in recent months

Walmart Inc. has agreed to sell the majority stake in its underperforming Walmart Brazil business to Boston-based private-equity company Advent International. Under the terms of the agreement, Advent will acquire 80 percent of Walmart Brazil, while Walmart will retain the remaining 20 percent upon the completion of the deal, which is subject to regulatory approval in Brazil.

“We have been in Brazil for over 20 years and are excited about this partnership with one of the country's leading retailers,” said Patrice Etlin, a managing partner at Advent International in Brazil. “We believe that with our local market knowledge and retail expertise, we can position the company to generate significant results and reach new levels of success in Brazil. We plan to invest in the business [and] work with the Walmart Brazil management team, associates, Walmart and our industry advisors to create a more agile and modern company to accelerate its development and improve the customer experience.”

Since Advent opened its São Paulo office in 1997, it has invested in 30 Brazilian companies from various sectors.

“Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world,” noted Enrique Ostale, EVP 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.”

According to the companies, the deal was reached following “a thoughtful and deliberate review of Walmart’s international portfolio.”

 As a result of the transaction, Walmart expects to record a noncash, net loss of about $4.5 billion as a discrete item in the second quarter, with a significant portion of the net loss due to the recognition of cumulative foreign currency translation losses and the final loss liable fluctuate considerably due to changes in currency exchange rates up to the date of close. Following an expected close later this year, the Bentonville, Ark.-based mega-retailer expects no continuing material effect on earnings per share in the current fiscal year and a minor positive impact next fiscal year.

The deal is just one of three major international transactions that the company has undertaken of late, the others being the acquisition of a majority stake in Indian ecommerce powerhouse Flipkart, and the unloading of its British subsidiary Asda to Sainsbury’s.

Walmart operates more than 11,700 stores under 65 banners in 28 countries, and ecommerce websites. The retailer has been present in Brazil for 22 years; Walmart Brazil now has 438 stores in 18 states, with 55,000 associates.

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