Bharti Enterprises and U.S. retail giant Walmart, on Wednesday, announced the termination of their joint venture, ending a six-year relationship that was marked by troubled times in the last few months. The immediate fallout of the termination was the appointment of former Walmart India Country Head Raj Jain as an advisor to Bharti group.
In a joint statement, the two companies said they have reached an agreement to independently own and operate separate business formats in India, and discontinue their franchise agreement in the retail business. The agreement is subject to finalisation of definitive agreements and requisite regulatory approvals. The U.S. retail major will now buy out its Indian partner in their 50:50 cash-and-carry joint venture, Bharti Walmart, which runs 20 wholesale stores under the ‘Best Price Modern Wholesale’ brand in India.
The financial details of this transaction were not disclosed. Bharti will acquire $100 million worth of compulsory convertible debentures (CCDs) held by Walmart in Cedar Support Services, a company owned and controlled by the Indian firm. It will also continue to run the ‘EasyDay’ retail stores on its own. In a statement, Bharti Enterprises Managing Director Rajan Bharti Mittal said Bharti would continue to invest in Bharti Retail across all formats. “We have a strong platform to significantly grow the business,” he added. Similarly, Walmart said it planned to continue to grow its business while working with the government and interested stakeholders to create conditions that enabled foreign direct investment in multi-brand retail.
“Given the circumstances, our decision to operate independently will be beneficial to both parties,” Walmart Asia President and CEO Scott Price said. The two had joined hands in 2007, and launched their first cash-and-carry store in Amritsar in May 2009. A Walmart India spokesperson said: “We are working with Bharti to finalise the terms of the agreement, and transition arrangement. We will provide further financial information as appropriate.”
Experts in the retail industry were of the view that this move was inevitable as both parties had not been having the best of relationships during the last few months, especially after the Enforcement Directorate launched a probe into the monetary transactions of $100 million to Cedar Support Services.