The American Multinational Retail Corporation Walmart Inc. has announced to sell the majority of its stake that is 80% stake in its Brazilian business operations to a private equity company Advent International Corp. decreasing its existence in countries where it is battling and struggling for profitability.
Walmart is a US-based retail company which is the world’s largest firm in terms of revenue generation. The company is now on the tracks of exploring and expanding overseas by selling assets in lower-growth markets and investing in high-profit opportunities like India and China.
Walmart expects to keep a 20% stake but, the terms and financial details of the deal have not been revealed as of now. The retail company, however, has expressed an expectation of recording a non-cash net loss of about $4.5 billion related to the deal 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 significantly due to changes in currency exchange rates up to the date of close. Advent would contribute additional capital to the business over a three-year period, and Walmart would provide an indemnification for pre-closing tax and legal contingencies, as well as certain other matters,” said Walmart.
The process of its selling off the subsidiary business comes just weeks after Walmart announced that it would be taking a majority stake in the largest online retailer in India named Flipkart. The company had been planning to expand in Brazil for over a decade but it couldn’t be possible amid a series of operational issues and the Brazil recession. But now, it is on the final stage of acquiring the stake in Brazil. The deal has been in process for months and is expected to close in the second half of FY 2019.