Wal-Mart raises its stake in Chinese e-tailer JD.com to 10.8%
by October 5, 2016 5:11 pm 353 views
Wal-Mart Stores, through its subsidiary Newheight Holdings Ltd., doubled down on its stake in JD.com, a Chinese e-commerce retailer second in market share to Alibaba.
A Wednesday (Oct. 5) federal filing with the U.S. Securities and Exchange Commission disclosed Wal-Mart increased its JD.com ownership stake to 10.8% from the 5% it acquired earlier this year in exchange for its online grocery business known as Yihaodian.
Wal-Mart’s JD.com holdings of 265,310,428 shares of Class A shares have a street value of $7.829 billion as of Wednesday. JD.com shares (Nasdaq: JD) rose 5.5% in after hours trading once the news was made public. Wal-Mart Stores (NYSE: WMT) shares were unchanged after hours at $71.67, down 7 cents in Wednesday trading.
Analysts have lauded Wal-Mart for its partnership with JD.com given the hurdles the Bentonville-behemoth has seen in growing its business in China, where Alibaba has the majority share. Wal-Mart Stores CEO Doug McMillon said in June the company needs to succeed in China, where it estimates that 25% 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 June announcement. “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.”
Wal-Mart said the 5% stake in JD.Com made in June (valued at $1.5 billion) would increase second quarter earnings by 12 to 15 cents per share. Wal-Mart is expected to update its earnings guidance Thursday (Oct. 6) at its annual meeting with analysts in Bentonville.