Walmart, a major player in global retail, has divested its entire $3.74 billion stake in Chinese e-commerce giant JD.com. This move marks the end of an eight-year investment as Walmart shifts its focus towards enhancing its own operations in China.
The sale, which was fully subscribed, involved offering 144.5 million American depositary shares of JD.com within a price range of $24.85 to $25.85 per share. This pricing was approximately 11.8% below the closing price of JD.com shares on Tuesday. Morgan Stanley acted as the broker-dealer for the transaction. Following the sale, JD.com’s Hong Kong-listed shares fell more than 10%, with its U.S. shares dropping to $25.50 in after-market trading.
Walmart stated that this decision enables it to concentrate on its China-based operations, particularly its warehouse business, Sam’s Club, and to allocate resources to other strategic priorities. Despite the sale, Walmart emphasized its commitment to maintaining a commercial relationship with JD.com.
JD.com acknowledged the sale and expressed confidence in ongoing future cooperation between the two companies. The e-commerce firm recently saw a better-than-expected profit in the second quarter, attributed to its low-price strategy, despite a challenging retail environment in China characterized by a sluggish property market and declining consumer confidence.
The strategic shift comes as Walmart, which had owned a 5.19% stake in JD.com since 2016 after selling its Chinese online grocery store Yihaodian, seeks to capitalize on growth within its own business units in China. The decision underscores a broader trend of reevaluating investments in a competitive e-commerce sector facing severe price competition and margin pressures.
JD.com, in response to the sale, has initiated a $3 billion share buyback program, with a $390 million repurchase conducted recently. This move is part of its broader strategy to counteract the impacts of a volatile market and reinforce investor confidence.
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