Walmart Inc (NYSE:WMT) announced that the company has sold a majority stake of its Brazil business amid sluggish sales.
The retailer said on Monday that it has sold an 80% stake in its Brazilian operations to private equity firm Advent International Corp. as the company has been struggling to remain profitable in the South American nation. The move marks the third major international deal from the retailer since April.
Walmart is the biggest retailer in the world and the company is hoping to expand its business overseas by selling assets in lower-growth markets and investing in high-profit opportunities such as China and India. The retail chain had been focusing on expanding in Brazil for a decade, but a series of operational issues and the Brazil recession has taken a toll on its business there.
It’s unclear how much the transaction was worth, but the company said that it would record a non-cash charge of about $4.5 billion related to the deal in the second quarter. The retailer will maintain the remaining 20% stake in Walmart Brazil.
Two people close to the deal said that the charge is close to the value of the Brazilian unit on the Walmart books, meaning close to zero. Walmart spokesman Randy Hargrove said that the retailer will not receive payment for the unit, but could receive up to $250 million from Advent based on the unit’s performance.
WMT stock gained about 2.7% on the news.