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Walmart Joins Argentina Corporate Exodus After Selling Unit

Patrick Gillespie
·2 min read

(Bloomberg) -- Walmart Inc. agreed to sell its business in Argentina, joining the exodus of multinationals from the South American nation amid toughening business conditions.

The world’s largest retailer is departing the country after 25 years with a deal to sell its Argentine operations to local investor Grupo de Narvaez, according to a joint statement Friday. Walmart, which didn’t disclose the value of the transaction, said it will record a non-cash loss of about $1 billion after tax mainly because of currency losses. It won’t retain an equity stake after the transaction.

Walmart currently employs over 9,000 workers in the country and as of 2019 it was the nation’s ninth-largest private employer. It also operates two other big-box chains in Argentina, Punto Mayorista and Changomas. The new owner was founded by businessman Francisco de Narvaez, who owns supermarket chains in Latin America among other investments.

The sale is part of Walmart Chief Executive Officer Doug McMillon’s strategy to reshape the retailer’s portfolio of international assets. Among recent changes, Walmart sold a majority stake in its Brazil operations to Advent International in 2018 and last month found a buyer for its U.K. grocer Asda.

Walmart shares gained 0.7% at 1:18 p.m. in New York trading.

Tougher Environment

Walmart’s departure comes after Argentina President Alberto Fernandez’s government has increased currency controls and temporarily frozen prices on consumer items from food and beverages to mobile phone plans and internet service. He’s also made it illegal for companies to fire workers on payroll and doubled workers’ severance pay if firms leave, close or negotiate a resignation.

Read More: Companies Flee Argentina, and Coronavirus Is Just One Reason

The policies complicate doing business in a country that’s on pace for its worst one-year economic decline on record, with 37% inflation and double-digit unemployment.

Other multinational firms, such as LatAm Airlines Group SA, Chilean retailer Falabella SA and auto paint firm Axalta Coating Systems, stopped operations in the country this year. Honda Motor Co. halted car making in Argentina in May, while Starbucks Corp. and American Airlines Group Inc. have reduced their footprint in the country too.

Read More: Argentina Needs a More Balanced Policy Mix to Resume Growth

Grupo de Narvaez already has retail operations in Argentina, Ecuador and Uruguay. The company owned the Tia Argentina supermarket chain until 1999, and it currently operates Tia Ecuador, among other grocers.

(Updates share trading in fifth paragraph)

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