Wal-Mart Stores completes $3 bn acquisition of online discount retail start-up Jet.com

Wal-Mart Stores Inc yesterday said that it has completed its $3-billion acquisition of online discount retail start-up Jet.com.

Wal-Mart had last month said that it was acquiring Jet.com for approximately $3billion in cash, a portion of which will be paid over time, and $300 million of its own shares, all of which will be paid over time. (See: Wal-Mart in talks to buy online discount retail start-up Jet.com)

The deal is the biggest acquisition by Wal-Mart after it acquired a majority stake in South African retailer Massmart Holdings in 2010 for $2.3 billion.

''The deal builds on Walmart's strong e-commerce foundation and is intended to help accelerate growth and deliver a seamless shopping experience for customers. Walmart.com and Jet.com will operate as separate brands, while leveraging technology and talent across both entities, Wal-Mart president and CEO, Doug McMillon wrote in blog-post on the company's website.

With the close of the deal, Marc Lore, founder and CEO of Jet.com, now joins Wal-Mart as executive vice president at Walmart and president and CEO of Walmart eCommerce in the US.

He will lead both Walmart.com and Jet.com, reporting to McMillon.

Jet.com is a privately-held e-commerce company based in New Jersey.

It had raised $820 million in four venture rounds from firms including Google Ventures, Goldman Sachs, Bain Capital Ventures, Accel Partners, Alibaba Group, and Fidelity.

In its latest round of funding in May this year, Jet.com was reported to have been valued at $1.3 billion.

It has an innovative pricing system under which it offers large up-front discounts and the lowest prices to encourage users to buy more items at one time and to purchase items that are located in the same distribution centre, making the purchases less expensive for the company to collect and ship.

It initially charged an annual fee of $50 fee, but later changed its strategy and discontinued this subscription model.

Armed with a $9-billion in cash, Wal-Mart has been on an acquisition spree since the past five years, buying 15 startups in order to boost its e-commerce division @WalmartLabs.

Some of these acquisitions include Stylr – a mobile app that allows shoppers to locate clothes in nearby stores, Alchemy – a product research company and a leader in e-commerce technology, Yumprint –a recipe discovery and meal planning service provider, and others.

Wal-Mart's e-commerce business has struggled to keep pace with its larger online rival Amazon. Its online sales were $13.7 billion in 2015, according to research firm Internet Retailer.