Wal-Mart to buy 5 per cent stake in JD.com as part of China deal

Wal-Mart Stores will acquire a 5 per cent stake in Asian e-commerce giant JD.com in a deal that will reshape the US retail chain’s operations in China.

As part of the agreement, JD.com will take ownership of Wal-Mart’s Yihaodian online marketplace, the companies said in a statement Monday. The Chinese branch of Sam’s Club will also open a store on JD.com, and the two companies will link up their supply chains.

The partnership gives Wal-Mart a fresh start in China after it struggled to adapt to a slowing local economy and a rise in online shopping. Wal-Mart CEO Doug McMillon has said that the company needs to succeed in China, where it estimates 25 per cent of global retail growth will come from in the next five years.

JD.com “has a very complementary business and is an ideal partner that will help us offer compelling new experiences that can reach significantly more customers”, McMillon said in the statement.

“We also look forward to offering customers a tremendous number of quality imported products not previously widely available in China through Wal-Mart and Sam’s Club.”

A 5 per cent stake in JD.com would be worth about US$1.5 billion at its current stock price. Wal-Mart will receive about 145 million newly issued class A shares of JD.com in the transaction. That deal will increase the retailer’s earnings per share by 16 to 19 US cents in the second quarter, according to the statement.

“We look forward to further developing Yihaodian, which has tremendous strength in important regions of eastern and southern China,” JD.com CEO Richard Liu said in the statement.