(Bloomberg) — Walmart Inc. is seeking to raise as much as $3.74 billion by selling its stake in Chinese e-commerce firm JD.com Inc., ending an eight-year partnership in a key retail arena now plagued by an economic downturn and intense competition.
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The US retailer is offering 144.5 million shares in a $24.85 to $25.85 price range, people familiar with the matter said. Morgan Stanley is the broker-dealer handling the offering, they added, asking not to be identified because the information is private. That’s a discount of as much as 11.8% to Tuesday’s close, according to Bloomberg calculations.
JD.com’s Hong Kong-listed shares fell 11%, leading a broader selloff in Chinese e-commerce and tech stocks. The envisioned deal comes as Walmart refines its strategy in the world’s second-largest economy, where retail is dominated by online platforms such as Alibaba Group Holding Ltd. and Temu-owner PDD Holdings Inc. The deal comes as a property crisis, market volatility and uncertain job prospects take a toll on Chinese consumption.
Representatives for Walmart, JD.com and Morgan Stanley didn’t immediately respond to requests for comment.
Walmart’s Sam’s Club has been a rare bright light for the company. In China, the unit offers premium goods with a membership model and has been a success in the supermarket business. However, the company’s other outlets are struggling as rivals chase cash-strapped shoppers.
Last week, Alibaba — long a barometer for the industry — surprised investors when it revealed its main commerce business actually shrank in the June quarter.
The consumer environment in general is worsening and growth is evaporating given the economic uncertainty. JD.com’s June-quarter results beat expectations — even though revenue grew a mere 1.2%. That extended a string of single-digit quarters dating back to 2022, a period of malaise that’s halved its market value since the start of last year.
The share sale would mark the end of a partnership between the two companies that started when Walmart acquired a 5% stake in the Chinese company in 2016.
That deal also involved JD.com taking over Walmart’s Yihaodian online marketplace, which focused on selling groceries to higher-end female shoppers in major Chinese cities, the companies said then. Later that year, Walmart increased its holdings in JD.com to 10.8%.
–With assistance from Edwin Chan and Daniela Wei.
(Updates with Hong Kong shares in third paragraph)
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