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Walmart to acquire Jet.com for $3 billion


jaisonline

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FYI since jet.com has been used by BP members for LEGO purchases.

http://www.usatoday.com/story/money/2016/08/08/walmart-acquires-jetcom-for-3-billion/88386988/

usatoday.com

Walmart to acquire Jet.com for $3 billion

Hadley Malcolm, USA TODAY 9:22 a.m. EDT August 8, 2016

Walmart's $3 billion acquisition of Jet.com is expected to help the retailer grow its e-commerce business at a faster rate and reach more Millennial customers.(Photo: Danny Johnston, AP)

Walmart will acquire e-commerce start-up Jet.com in a $3 billion cash deal expected to help the world's largest retailer become a powerhouse online shopping destination.

Jet is also set to receive $300 million in Walmart shares paid out over time, according to the terms announced Monday. Walmart said it expects to receive regulatory approval for the deal, which is expected to close this year. Investor reaction was subdued, with Walmart shares ticking up just .65% in pre-market trading.

While the brands will remain separate, Walmart plans to tap Jet's expertise in online ordering to grow its e-commerce business at a faster rate and reach more customers, particularly Millennials.

Jet CEO Marc Lore will remain with the company, though his exact role wasn't disclosed. The deal comes a little more than a year after Lore co-founded the company with Nathan Faust and Mike Hanrahan as a competitor to Amazon and even Walmart itself. Jet aimed to be cheaper than its competitors by using a model that gives customers a bigger discount as more items are added to their basket. Walmart will look into adopting that strategy for its website once the deal is finalized, says Walmart spokesman Dan Toporek.

Jet faced several hiccups in its first year in business. Three months in, it abandoned its initial plan to charge customers a $50-per-year subscription fee to shop with the site, leading to skepticism over whether the company would be able to generate enough profit to stay in business.

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These deals always make it sound like the original owners are getting rich... my guess is that the majority of the $3 billion is going to service debt and other costs. The owners will likely see a decent chunk of change, but their true payoff is likely in the 300 million dollars of Walmart shares which they probably have to hold for several years before selling.

Yes, I am just speculating since I don't know the fine print, but just saying the news always makes these things look rosier than they are.

And yes, I'd probably take whatever those guys at Jet are getting out of the deal too. ;)

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48 minutes ago, gregpj said:

These deals always make it sound like the original owners are getting rich... my guess is that the majority of the $3 billion is going to service debt and other costs. The owners will likely see a decent chunk of change, but their true payoff is likely in the 300 million dollars of Walmart shares which they probably have to hold for several years before selling.

Yes, I am just speculating since I don't know the fine print, but just saying the news always makes these things look rosier than they are.

And yes, I'd probably take whatever those guys at Jet are getting out of the deal too. ;)

Even at $50 millions net, it is not bad payoff for 2 years of work (1 year to setup (assumed) and 1 year Jet being operational)

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