Walmart (WMT.N) is looking to raise up to $3.74 billion by selling its stake in the Chinese e-commerce giant JD.com (9618.HK), according to a term sheet seen by Reuters. The U.S. retailer plans to offer 144.5 million American depositary shares within a price range of $24.85 to $25.85, with Morgan Stanley acting as the broker-dealer for the sale.
As JD.com‘s largest shareholder, Walmart has been a key partner over the past eight years. However, the company stated that this move allows it to focus more on its own operations in China, particularly Walmart China and Sam’s Club, while redirecting capital toward other priorities.
Following the announcement, JD.com‘s Hong Kong-listed shares fell more than 10% in early trading on Wednesday, and its U.S.-listed shares dropped 10% in after-market trading on Tuesday.
Despite a better-than-expected second-quarter profit reported by JD.com last week, the company’s share price has plummeted by around 70% since its peak in early 2021. The downturn in China’s retail market, driven by low consumer confidence due to a property market slowdown and concerns about employment, has led to a price war among major e-commerce players like JD.com, Alibaba, and Pinduoduo, pressuring revenue growth and margins.
Liu Xingliang, an internet industry analyst at Beijing-based DCCI Data Center, noted that Walmart’s decision reflects an optimization of its global business strategy rather than a lack of confidence in JD.com‘s prospects.
Walmart’s revenue from its China business grew by 17.7% year-on-year to $4.6 billion in the second quarter, driven by strong performance in its Sam’s Club warehouse chain and digital offerings. The U.S. retailer currently holds a 5.19% stake in JD.com, a partnership that began in 2016 when Walmart sold its Chinese online grocery store, Yihaodian, in exchange for a 5% stake in JD.com.