Under a new agreement, Advent International, a global private equity investor, will take control over the majority stake in Walmart Brazil, acquiring 80 percent of the retailer's Brazilian operations. The agreement grants Walmart the remaining 20 percent once the transaction has been completed.
“Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world,” said Enrique Ostale, EVP and CEO of Walmart UK, Latin America, and Africa, in a recent press release. “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.”
After 20 years in Brazil, the retail giant has not resolved issues troubling the Brazilian market, a tough pill to swallow since, as Forbes reports, Walmart typically looks to markets where believes it will succeed. While the reasons for the company’s Brazilian venture’s less-than-stellar stance are not concrete, Managing Director of GS & Intelligence, Eduardo Yamashita, suggested to the news source that this was possible the result of international and local competition or the retailer’s difficulties to localize its business to meet Brazil’s diverse population’s needs.
This move, the company noted, is part of Walmart’s strategy to position it for long-term success.
“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.”
The retailer will record a non-cash, net loss of about $4.5 billion as a discrete item during its second quarter, a big portion that the retailer attributes to the recognition of cumulative currency fluctuation losses.
How will this move impact other international players, and will we see more shifts in focus from Walmart as a result? Deli Market News will keep you updated.