Summary
Walmart Inc. (WMT) announced a significant strategic alliance with JD.com, Inc. (JD), China's largest e-commerce company, on June 20, 2016. This transaction involves Walmart selling its Yihaodian marketplace business, including its brand, website, and app, to JD. In return, Walmart received approximately 5% of JD's outstanding ordinary shares on a fully diluted basis. This alliance is designed to enhance Walmart's online presence in China by making its China operations a preferred retailer on JD's O2O platform and establishing Sam's Club China as a flagship store on JD's marketplace with preferred placement. While Walmart divested its direct e-commerce marketplace assets in China, it retains the ability to operate its existing digital platforms and physical stores. The company anticipates this transaction will positively impact diluted earnings per share from continuing operations by approximately $0.16 to $0.19 in the second quarter of fiscal year 2017.
Key Highlights
- 1Walmart forms a strategic alliance with JD.com, Inc., China's largest e-commerce company.
- 2Walmart sells its Yihaodian marketplace business, including brand, website, and app, to JD.com.
- 3Walmart receives approximately 5% of JD.com's ordinary shares (fully diluted basis) as consideration.
- 4Walmart China becomes a preferred retailer on JD's O2O platform.
- 5Sam's Club China will operate as a flagship store on JD's marketplace with preferred placement.
- 6Walmart retains rights to operate its existing digital platforms and physical stores in China.
- 7Transaction is expected to increase diluted EPS from continuing operations by $0.16-$0.19 in Q2 FY2017.