Partnerships / Acquisitions

Advent In Talks To Buy 50 Percent Of Walmart Brazil

There are reports that Advent International is in talks to buy a 50 percent stake in Walmart Brazil.

According to Reuters, other private equity firms interested in possibly investing include GP Investments Ltd and ACON Investments LLC.

Brazilian newspaper O Globo reported that Advent was looking to acquire 50 percent of Walmart Brazil, but none of the parties involved would comment on the matter. The paper also wouldn't reveal how it got the information.

The world’s biggest retailer currently has 471 stores in Brazil, reporting revenues of almost 30 billion reais ($9.4 billion) in 2016. But Walmart has also suffered operating losses in Brazil for the past seven years, due in part to inferior locations, inefficient operations, labor issues and uncompetitive prices. Reports have found that locals have been increasingly attracted to “cash and carry” stores, where they can save by buying in bulk. In addition, Brazilians find local shops more convenient.

In August, the company announced that it was investing about $316 million in its Brazilian Walmart locations over the next two years to remodel 120 of its stores in the country.

The company’s operations in Brazil have particularly struggled over the past two years, as the country faced its worst recession in decades. However, there are signs that the country is in the process of recovering: Holiday sales were more than 5 percent higher than a year ago.

The news of the potential deal comes after the announcement that COO Judith McKenna will take over the international unit on Feb. 1. Walmart International brought in net sales of $29.55 billion during the last reported quarter, representing about 25 percent of the company’s total net sales.

After failing to garner interest from other retailers, Walmart moved on to buyout firms to try to unload its Brazilian unit.

In hopes that the country is in an economic recovery – and that a restructuring of operations will boost profits – Walmart wants to keep a stake so it can potentially recoup some of its losses.

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