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Walmart will acquire Bharti’s stake in the wholesale cash and carry stores they jointly operate in India for an undisclosed sum.
“Upon receipt of required clearances, Walmart would acquire Bharti’s stake in Bharti Walmart Pvt Ltd, a joint venture between Bharti and Walmart, giving Walmart 100 per cent ownership of the Best Price Modern Wholesale cash and carry business,” said a joint statement.
The statement said the companies had reached an agreement to independently own and operate separate business formats in India and discontinue their franchise agreement in the retail business.
Bharti Enterprises Vice Chairman and Managing Director Rajan Bharti Mittal said: “Bharti is committed to building a world-class retail venture and will continue to invest in Bharti Retail across all formats. We believe that with our current footprint of 212 stores, we have a strong platform to significantly grow the business and delight customers.”
Bharti will acquire the $100 million Compulsory Convertible Debentures (CCDs) held by Walmart in Cedar Support Services, a company owned and controlled by Bharti as part of the transaction.
The investment in Cedar by Walmart is being investigated by India’s Enforcement Directorate following allegations of violations of norms.
Walmart plans to continue to grow its business in India while working with the government and interested stakeholders to create conditions that enable foreign direct investment in multi-brand retail.
In August, India announced a second wave of reforms by further liberalising FDI policy and relaxing investment norms in multi-brand retail.
“Given the circumstances, our decision to operate independently will be beneficial to both parties,” said Walmart Asia President and CEO Scott Price.
“Through Walmart’s investment in India, including our cash and carry business, supply chain infrastructure, direct farm programme and supplier development, we want to serve India and its people, and continue to make important social and environmental contributions to the country,” Price said.
The two partners started operations in 2007 and launched their first cash and carry store in Amritsar in May 2009.
There are currently 20 Best Price Modern Wholesale stores in India.