Wal-Mart buying Jet.com for $3 billion

Today the company is making another big bet towards that path by confirming it will be buying Jet.com, online-only shopping site that has been live for a little over a year, for $3 billion in cash plus up to $300 million in shares for Jet founders.

Jet and Walmart will remain two distinct brands, though Jet CEO Marc Lore will remain with Walmart to manage their USA e-commerce operations, according to reports that have not been confirmed by either company.

The $3.3 billion cash and stock purchase price represents almost six times the amount of funding Jet.com has raised in its brief history. It's another jolt of entrepreneurial spirit being injected into Walmart, " he added. But Wal-Mart Stores Inc.'s $3.3 billion acquisition of Jet is the highest amount ever paid for a USA e-commerce startup, according to Dow Jones VentureSource, and marks the second time.

Launched in 2015, Jet.com was co-founded by Mike Hanrahan, Nate Faust and Marc Lore, who serves as its CEO.

Walmart benefitted from the know-how of Allen & Co. and JPMorgan for the purchase, which should be completed this year, after regulatory approval.

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Walmart and Jet will maintain distinct brands while leveraging technology solutions from both companies to develop new offerings, such as additional capabilities on the Walmart app, site and in stores. Right now, the company has more than 12 million different products for sale on its marketplace. The acquisition of Jet will infuse Walmart with fresh ideas and expertise, as well as an attractive brand with proven appeal, especially with Millennials, the first generation of true digital natives.

Wal-Mart has spent billions to build up its e-commerce business over the years.

Jet.com's online portal, which uses an algorithm to adjust prices, would complement Walmart own e-commerce business, which generated some $13.7 billion in revenue in fiscal 2016 (ended in January). Walmart already conducts business online but not on the same scale as Amazon. It also has a growing customer base, with more than 400,000 new shoppers added monthly and an average of 25,000 orders processed daily.

We started Jet with the vision of creating a new shopping experience. "His mindset and the way the two of us have come together fairly quickly to see e-commerce opportunities. has been quite enjoyable as we've brainstormed it". While in acquisition talks, Bezos launched Amazon Mom to undercut Diapers.com on prices and pressure Lore to sell, according to The Everything Store: Jeff Bezos and the Age of Amazon. The company was last valued at around $ 1 billion.

(Copyright © 2015. All Rights Reserved.)

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