Walmart refines global plan with $10bn Asda sale

Bloomberg

Walmart Inc.’s plan to shed control of its UK grocery chain, Asda, reflects a global strategy to emphasize faster-growing markets over some of its more mature ones.
The world’s largest retailer said that Asda will combine with British retailer J Sainsbury Plc, mixing the UK’s second-biggest supermarket chain with No. 3 Asda in a deal worth about $10 billion. Walmart will retain a 42 percent stake in the combined company, and will take a noncash loss of about $2 billion on the transaction, according to a statement.
Walmart is pursuing faster-growth markets overseas, including China and India, while battling e-commerce giant Amazon.com Inc. in its core domestic market. It’s close to completing a deal for a majority stake in India’s biggest online retailer, Flipkart Online Services Pvt, Bloomberg reported.
“They’ve consistently exited underperforming markets or markets where they just haven’t been able to really get their offering deeply embedded with the customer base,” said Jennifer Bartashus, senior consumer analyst for Bloomberg Intelligence. Moving ahead, “it’s going to be much more of a contained strategy in areas where there’s a substantial amount of income and population growth that will become a key customer base.”
Walmart probably will expand in countries where it already has a presence and international partners for now, rather than targeting entirely new markets, she said. The company may shed its investment in its struggling Brazilian unit, she said.
The deal is an example of how Walmart is thinking differently about its global portfolio, said Judith McKenna, the company’s international president.