Wal-Mart in talks to sell major stake in Brazil operations
Wal-Mart in talks to sell major stake in Brazil operations
Wal-Mart is being advised by Goldman Sachs & Co, according to one of the sources who spoke on condition of anonymity. Other private equity firms that are looking into the investment in the Brazilian unit are GP Investments and Acon Investments, the source added.
Wal-Mart officials in Brazil declined to comment. Advent and GP declined to comment. Goldman and Acon did not immediately reply to requests for comment.
Wal-Mart’s overseas business is not the growth driver it once was as it has continued to grapple with an economic slowdown in Brazil and competition from discount retailers in the UK.
In 2016, Wal-Mart Chief Executive Officer Doug McMillon flagged to investors that he was planning to review its global operations. His comments had sparked speculation that Wal-Mart would look to restructure or even pull out of markets where it has struggled. Brazil was among the countries most often cited by analysts as a potential target.
During the same year, Wal-Mart shuttered at least 10 percent of its stores in Brazil and shed non-core businesses across Latin America. It also sold its e-commerce business in China to Chinese e-commerce company JD.com and picked up a stake in JD.com instead of trying to crack the market on its own.
A partial exit by Wal-Mart from Brazil comes as Chief Operating Officer Judith McKenna takes over the international unit of the world’s biggest retailer. The move would give a new partner the chance to turn around a sprawling operation that has struggled to turn a profit.
Wal-Mart entered Brazil in 1995 and had grown into the country’s third-largest retailer following two major acquisitions in 2004 and 2005 and a period of rapid store expansion that came to a halt in 2013.
It currently operates 471 stores in Brazil, according to the company’s local website. The retailer’s Brazilian unit reported revenues of almost 30 billion reais (SR35 billion) in 2016.
Wal-Mart has posted operating losses in Brazil for seven years in a row after an aggressive, decade-long expansion left it with poor locations, inefficient operations, labor troubles and uncompetitive prices, Reuters reported early in 2016.
One of the people with knowledge of the deal said Wal-Mart’s operations in Brazil had not improved over the last two years, which coincided with the country’s harshest recession in decades.
Wal-Mart began sounding out possible investors in the unit several months ago but got no interest from rival retailers, which led the company to seek out buyout firms, the source said.
The retailer intends to keep a stake in the Brazilian unit to be able to recoup part of its losses in the country later if an economic recovery and restructured operations boost results, according to the source.
Retail sales in Brazil are starting to recover from the recession. Christmas sales were 5.6 percent higher than a year ago, according to credit data supplier Serasa Experian.
Earlier on Sunday, newspaper O Globo said private equity Advent was in talks to acquire 50 percent of the Wal-Mart unit. The paper did not say how it got the information or any details on the state of the talks.
UAE to loosen visa rules for investors and innovators
- UAE cabinet announces the launch of an integrated visa system to attract talent and talent in all vital sectors of the national economy
- The Council also announced changes in the system of foreign ownership of companies in the country, which allows the acquisition of 100% of the global investors by the end of the year
DUBAI: The United Arab Emirates, home to financial hubs Abu Dhabi and Dubai, is loosening its residency laws and will grant long-term visas for up to 10 years to investors and highly-skilled professionals.
The 10-year residency visas will be granted to specialists in science, medicine and research, and to “exceptional students.” The state-run WAM news agency says the plan aims to attract global investment and innovators.
The UAE Cabinet approved the new rules on Sunday, saying plans are also on track to allow foreign investors 100 percent ownership of their UAE-based companies this year.
His Highness Sheikh Mohammed bin Rashid Al Maktoum affirmed that the UAE will remain a global incubator for exceptional talents and a permanent destination for international investors. “The UAE has been open, governed by tolerance and contributed to by all who live on its land.
“Our open environment, tolerant values, infrastructure and flexible legislation offer the best opportunities to attract international investment and exceptional talent in the UAE,” he said. “Our country is the land of opportunity, the best environment for realizing human dreams and unleashing their extraordinary potentials.”
The new regulations include raising the percentage of global investors’ ownership in companies to 100% by the end of the current year. He directed the Ministry of Economy in coordination with the concerned parties to implement the decision and follow up on its developments and submit a detailed study in the third quarter of this year.
The new regulations approved by the Council of Ministers and the authorities concerned have also set the procedures for implementing them to grant investors residence visas of up to ten years for them and all members of their families, as well as granting residency visas of up to ten years for specialized competencies in the medical, scientific, research and technical fields.
The new regulations also include visas for students studying in the country for five years and a 10-year residency for exceptional students.
Under current laws, foreign companies must have an Emirati owning 51 percent of the shares, unless the company operates in a free zone. Major brands Apple and Tesla are believed to be exceptions to the rule.