What Walmart will do after buying in India, selling in UK

Bloomberg

The sun never sets on Walmart Inc.’s empire, thanks to its network of stores across five continents. But in the span of 10 days, chief executive Doug McMillon has begun dramatically redrawing the retailer’s map, and there’s likely more to come as it places bets to remain on top.
“All of a sudden, everything is in play,” said Dave Marcotte, an analyst at Kantar Retail.
In less than two weeks, Walmart has agreed to cede control of its British business to a competitor and spend $16 billion to acquire India’s e-commerce leader in its biggest-ever deal, fending off Amazon.com Inc.
The wheeling and dealing show how McMillon is focussing on high-potential markets like China and India, finding partners to help it battle online and cutting loose middling businesses. He’s got more work to do, though, and subpar markets like Brazil and Japan might be next on his list.
Walmart’s far-flung international units don’t get much attention, but they’re important as a source of cash, management talent and ideas that percolate into its core US operations.
Sales growth outside the US once topped more than 10 percent annually, adjusted for currency moves, but it’s less than half that now as sluggish economies, store closures and fierce competition have taken their toll.
Those pressures — combined with a US e-commerce business that continues to spill red ink and higher labor expenses from this year’s wage hike — have forced McMillon into hard choices.
Some, like selling the British Asda stores, were welcomed by Wall Street, but last week’s deal got a rude welcome from investors, who raised concerns about Flipkart’s steep
losses and asked whether Walmart’s cash would be better spent elsewhere.
McMillon defended the Flipkart deal to analysts, saying it was a unique opportunity. He’s certainly mindful of past missteps abroad, such as his 2011 decision to buy an unprofitable, second-tier online marketplace in China that’s forced the company to play catch-up to Alibaba — the Amazon of China — ever since.
Walmart’s international reach sprawls across 6,360 stores in about two dozen countries from Argentina to Zambia. Many were acquired during a buying spree from 1999 to 2009, but that era of aggressive flag-planting is long over.
Today the international business accounts for less than one-quarter of Walmart’s total revenue, down from nearly 30 percent five years ago.

Flipkart investors could force Walmart to take company public
Bloomberg

Walmart Inc., the world’s largest retailer, could be forced to publicly list its newly acquired Indian e-commerce company, Flipkart Group, within four years at the request of a small minority of Flipkart shareholders, a public filing shows.
Walmart’s $16 billion purchase this week of India’s biggest online seller gave the Arkansas-based retailer a 77 percent stake in Flipkart and a foothold in a country with 1.3 billion people and one of the world’s fastest growing economies. That the purchase for India’s most valuable startup gave Walmart a leg up over its chief rival, Amazon.com Inc., which has been investing heavily in India, only sweetened the deal.
But whatever euphoria existed among Walmart executives for striking the most expensive purchase in the company’s history could be short-lived. The deal’s terms give investors controlling as little as 14 percent of Flipkart’s shares the right to require Walmart to take the Indian company public in as soon as four years, according to the filing.
The investors could demand that Flipkart’s valuation through an IPO be no less than the roughly $20.8 billion the company commanded when Walmart purchased a 77 percent stake.
“While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future,” Walmart said.