Walmart is selling a majority stake in Walmart Brazil to Advent International, a global private equity investor group.
Under the terms of the agreement, Advent will hold 80% of Walmart Brazil, and Walmart will retain the remaining 20% upon the completion of the transaction. The transaction 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, 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.”
Having a presence in Brazil for the last 22 years, Walmart Brazil has 438 stores in 18 states, with 55,000 associates.
The decision to partner with Advent in Brazil results from a review of Walmart’s international portfolio, the company said. As a result of the transaction, Walmart expects to record a non-cash, net loss of approximately $4.5 billion as a discrete item in the second quarter. A significant portion of the net loss is due to the recognition of cumulative foreign currency translation losses and the final loss could fluctuate due to changes in currency exchange rates up to the date of close. Following an anticipated close later this year, Walmart expects no ongoing material impact to earnings per share in the current fiscal year and a slight positive impact next fiscal year.
“Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world,” said Enrique Ostale, evp/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.”
The transaction follows other international moves for Walmart, including its $16 billion acquisition of e-commerce outlet Flipkart in India and a merger deal between its Asda Group and Sainsbury in the United Kingdom.