Discussion Post
Key words and Definitions
• Divestiture - the practice of selling a business or investment asset.
• Capital budgeting - evaluating investment options for a firm.
• International diversification - reducing risk by investing in more than one country.
Summary: Key Points in the Article.
Walmart decided to divest 85% of its stake in the Japanese supermarket chain Seiyu. The US retailer sold the company for about $1.6 billion to private equity firm KKR and Japanese e-commerce firm Rakuten. Walmart retained a 15% stake in Seiyu. Rakuten and KKR announced they would "accelerate investment in Seiyu's digital operations" given the consumer shopping changes driven by the pandemic.
For the past several years Walmart has increased its international investing as US growth stalled. The US retail giant will now focus even more on its presence in India and China. The Japanese investment failed to generate sufficient returns even after Walmart "plowed more than $1 billion" into Seiyu by installing its own distribution and computer systems and other improvements.
Thinking Critically Questions:
• Why is a divestiture a capital budgeting decision?
• Why is Walmart investing in other countries?
• Why did Walmart decide to sell most of its stake in Seiyu?
The response must include a reference list. One-inch margins, double-space, Using Times New Roman 12 pnt font and APA style of writing and citations.