Walmart to divest part of its Brazil business to Advent International
Category: #retail  By Pankaj Singh  Date: 2018-06-06
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Walmart to divest part of its Brazil business to Advent International

As part of the process to dispose of slow growing international operations, Walmart announced that it will sell 80% of its business in Brazil to Advent International while retaining a 20% stake. Walmart wants to focus on more promising areas and is working to pump up its resources to challenge Amazon at home and in Asia, especially on digital platforms.

Reportedly, the two companies had been in talks for months and expect to close the deal by the second half of fiscal year 2019. Walmart stated that it would bear a non-cash loss of $4.5 billion on Q2 resulting from the deal although neither Walmart nor Advent disclosed the exact terms of agreement. The world’s largest retailer explained that this loss is constituted significantly by cumulative foreign currency translation losses and until the deal closes, could rise further owing to exchange rate fluctuations.

Walmart also revealed that it is entitled to receive up to $250 million in contingent consideration from Advent but did not disclose the contingencies.

For the record, Brazil is the single biggest market in Latin America. Walmart, however, was unable to successfully capture the retail consumer market in the country and said in the last quarter it would eventually shut down its first party ecommerce business as well in Brazil.

Sources at Walmart said that Advent will input additional capital into the business over a planned three-year period with Walmart providing indemnification for pre-closing tax and any legal contingencies. The EVP and CEO for Walmart Africa, Latin America & UK, Enrique Ostale confirmed that the company will uphold a stake in Walmart Brazil to continue sharing global expertise in retail, provide opportunities for associates and low prices for customers.

Advent International has been in Brazil for over 20 years and is eager to complete this partnership deal with Walmart, a source at Advent commented. Advent plans to use its local knowledge and retail expertise to work with Walmart and Walmart Brazil’s management, associates and industry advisors for fast-track development and improved customer experience.



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Pankaj Singh

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Pankaj Singh

Pankaj Singh Develops content for Market Size Forecasters, Algosonline, and a couple of other platforms. A Post Graduate in Management by qualification, he worked as an underwriter in the UK insurance domain before deciding to switch his field of profession. With exp...

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