Walmart is selling a JD.com stake to focus on its China operations via Reuters
(Reuters) – Walmart is seeking to raise $3.74 billion by selling its stake in Chinese e-commerce company JD (NASDAQ:).com, according to a filing seen by Reuters, as the U.S. retailer focuses its operations in China.
Walmart (NYSE: ) is offering 144.5 million American depositary shares in a price range of $24.85 to $25.85, the name shows the sheet, and Morgan Stanley is the broker for the offering.
Walmart, JD.com's largest shareholder, said in a statement that it has been a key partner for the past eight years, and the US retailer is committed to an ongoing business relationship with the Chinese e-commerce giant.
“This decision allows us to focus on our strong China operations of Walmart China and Sam's Club, and spend money on other priorities,” Walmart said.
JD.com's Hong Kong-listed shares fell more than 10% in early trading on Wednesday. The US-listed shares fell 10% in after-market trading on Tuesday to $25.50 after Bloomberg first reported on the plan to sell shares.
JD.com declined to comment. Morgan Stanley did not immediately respond to a Reuters request for comment.
The Chinese e-commerce giant last week reported better-than-expected second-quarter profits, even though its share price has fallen nearly 70% from its early 2021 figure, and trading is little changed from 2016 levels, when Walmart became the biggest its. shareholder.
China's retail market has been hit by a steady decline in consumer confidence, caused by a slowdown in the property market and concerns about employment and incomes.
Major e-commerce firms, including JD.com and competitors Alibaba (NYSE:) and PDD Holdings' Pinduoduo (NASDAQ:) have engaged in a brutal price war to entice consumers to buy, depressing revenue growth and margins.
“Walmart said the decline was focused on the Chinese market, especially Sam's Club,” said Liu Xingliang, an internet industry analyst at Beijing-based DCCI Data Center on the stock market. “This means that Walmart is improving its global business structure, rather than lacking confidence in JD.com's development prospects.”
Walmart reported that revenue rose 17.7% year over year from its China business to $4.6 billion in the second quarter thanks to strong growth in Sam's Club merchandise and its digital offering.
The US retailer has a 5.19% stake in JD.com, according to LSEG data. The partnership between the companies began in 2016 when Walmart sold its Chinese online store, Yihaodian in exchange for a 5% stake in JD.com.
