Walmart, the world's largest retailer, is set to acquire two-year-old online retailer Jet.com in what appears to be the largest-ever acquisition of an e-commerce company, according to multiple sources familiar with the transaction.
The deal is expected to value Jet at right around $3 billion, according to these people. Some senior Jet executives, including co-founder and CEO Marc Lore, will have incentive bonuses on top of that.
Lore will also be tapped to run all of Walmart's U.S. e-commerce operations after the acquisition closes.
Walmart is expected to announce the blockbuster transaction on Monday, barring any last-minute hiccups. Bloomberg reported Saturday the two sides were trying to finalize the deal as early as this Monday.
Walmart and Jet declined to comment.
For Walmart, the purchase marks a giant bet on a largely unproven startup that only launched its shopping site widely last July. Up to now, the largest U.S. e-commerce acquisition was last year's $2.4 billion sale of Zulily, a public company, to QVC.
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The Jet acquisition is an acknowledgement by Walmart CEO Doug McMillon that his company needs outside help if it's going to ever close the giant gap with Amazon. It's still unclear whether that is the right strategy for the brick-and-mortar retailer.
The deal is in many ways a marriage of necessity, but a shot worth taking, as I explained last week when news of the talks first broke.
Walmart's $14 billion in annual e-commerce sales is a fraction of Amazon's $99 billion and is growing slower than the industry average. Its growth rate has decelerated for five consecutive quarters.
Jet.com was co-founded in 2014 by the entrepreneur Marc Lore in an attempt to build a new online megastore that would compete with the likes of Amazon, Walmart and Costco. Jet has secured more than $800 million in financing since its founding but is spending $20 million to $25 million on advertising a month to fund its growth. It is not profitable.
It most recently raised a $619 million round that gave it a value of more than $1.6 billion, but was going to have to keep raising huge sums of money to survive on its current path.
Lore pulled the rip cord instead, but he will be rewarded handsomely — he owns about 25 percent of the company, according to sources. Such a stake suggests Lore stands to make as much as $750 million in the deal. He will now have Walmart's deep pockets — the company registered $15 billion in profits last year — to try to fuel more growth at Jet.