Walmart 2011 Annual Report Download - page 51

Walmart 2011 Annual Report 49
15 Acquisitions, Investments and Disposals
Acquisitions and Investments
Bounteous Company Limited (“BCL”): In February 2007, the Company
purchased an initial 35% interest in BCL, which operates in China under
the Trust-Mart banner. The Company paid $264 million for its initial 35%
interest and, as additional consideration, paid $376 million to extinguish a
third-party loan issued to the selling BCL shareholders that was secured
by the pledge of the remaining equity of BCL. Concurrent with its initial
investment in BCL, the Company entered into a Shareholders’ Agreement,
which provides the Company with voting rights associated with a portion
of the common stock of BCL securing the loan, amounting to an additional
30% of the aggregate outstanding shares. Pursuant to the Share Purchase
Agreement, the Company was committed to purchase the remaining
interest in BCL on or before November 26, 2010, subject to certain conditions.
In October 2010, the Company and the selling shareholder mutually agreed
to extend the closing to May 26, 2011, while certain conditions of the
contract are being completed.
D&S: In January 2009, the Company completed a tender oer for the
shares of D&S, acquiring approximately 58.2% of the outstanding D&S
shares. As of the acquisition date, D&S had 197 stores, 10 shopping
centers and 85 PRESTO nancial services branches throughout Chile.
The purchase price for the D&S shares in the oer was approximately
$1.55 billion, allocated as follows:
• tangible and other assets, $2.25 billion;
• goodwill, $1.4 billion;
• liabilities assumed, $1.7 billion; and
• redeemable noncontrolling interest of $395 million.
In March 2009, the Company paid $436 million to acquire a portion of
the redeemable noncontrolling interest in D&S through a second tender
oer as required by the Chilean securities laws increasing its ownership
stake in D&S to 74.6%. This transaction resulted in a $148 million acquisi-
tion of that portion of the redeemable noncontrolling interest, and the
remaining $288 million is reected as a reduction of Walmart shareholders’
equity. Additionally, the former D&S controlling shareholders hold a put
option that is exercisable through January 2016. During the exercise period,
the put option allows each former controlling shareholder the right to
require the Company to purchase up to all of their shares of D&S (approx-
imately 25.1%) at fair market value at the time of an exercise, if any.
Netto: On May 27, 2010, the Company announced an agreement with
Dansk Supermarked A/S, whereby ASDA, our subsidiary in the United
Kingdom, will purchase Netto Foodstores Limited. Netto operates
193 units, each averaging 8,000 square feet. On March 9, 2011, the UK Oce
of Fair Trading conrmed its clearance of ASDA’s proposed purchase
of Netto, subject to the requirement that ASDA divest 47 Netto units.
The original estimated purchase price was approximately £778 million
($1.2 billion), subject to nalizing any divestitures. The transaction is
expected to close in scal 2012.
Massmart: On November 29, 2010, the Company announced an oer to
purchase 51% of Massmart, for approximately ZAR 17 billion ($2.3 billion).
Massmart operates 288 units under several wholesale and retail banners
in South Africa and 13 other sub-Saharan African countries. The transaction
is subject to nal regulatory approval.
Disposals
At January 31, 2010, the Company had an unrecognized tax benet of
$1.7 billion related to a worthless stock deduction from the nal 2007
disposition of its German operations. This matter was eectively settled
with the Internal Revenue Service, during the fourth quarter of scal 2011,
resulting in a $1.0 billion tax benet recorded in discontinued operations
in our Consolidated Statement of Income. See Note 10.
During scal 2009, the Company initiated a restructuring program for our
Japanese subsidiary, The Seiyu Ltd., to close approximately 23 stores and
dispose of certain excess properties, which was substantially completed
in scal 2010. This restructuring involved incurring costs associated with
lease termination obligations, asset impairment charges and employee
separation benets. The operating results, including the restructuring
and impairment charges, were approximately $79 million and $122 million,
net of tax, for the scal years ended January 31, 2010 and 2009, respectively,
and are presented as discontinued operations in our Consolidated
Statements of Income.
During scal 2009, the Company recognized approximately $212 million,
after tax, in operating prots and gains from the sale of Gazely Limited
(“Gazely”), our commercial property development subsidiary in the United
Kingdom. The operating results and gain on sale of Gazely are presented
as discontinued operations on our Consolidated Statement of Income for
the year ended January 31, 2009. The transaction continues to remain
subject to certain indemnication obligations.
The assets, liabilities, net sales and cash ows related to our discontinued
operations were not signicant during scal years 2011, 2010 and 2009.
The net income or losses related to our discontinued operations, including
the gain and (losses) upon disposition, are as follows:
Fiscal Years Ended January 31,
(Amounts in millions) 2011 2010 2009
Germany
$1,041 $ — $ —
Gazeley
— — 212
Seiyu (7) (79) (122)
Other — — 56
$1,034 $(79) $ 146
Notes to Consolidated Financial Statements