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  • 08.08.16

How analysts are reacting to the Walmart-Jet.com deal: Price seems steep but comes with brainpower 

“As we believe ‘catching’ Amazon online is an unrealistic goal for any brick-and-mortar retailer, Walmart now has a definite leg-up on its competitors in the very important race to be number 2 online.” — Charlie O’Shea, Moody’s lead retail analyst

• Creative brain power, personified by Jet.com founder Marc Lore, may be the most important asset that Walmart will gain from the deal. “You know that he is a smart guy that can execute. What Walmart needs is an innovation machine that consistently is putting out something new every single week. (Jet’s) smart basket…is one of the 50 creative ideas they need between now and this time next year.” — Sucharita Mulpuru, Forrester

• “We think the addition of a rapidly growing and innovative etailer should enable Wal-Mart to attract human capital and knowledge that it might not have otherwise been able to attain. Further, the release didn’t make clear the role of Jet.com’s founder, Marc Lore, but with $300 mm of shares to be paid out over time, the new team will have an incentive to succeed. In our view, while this transaction won’t really have a near-term impact on Wal-Mart’s investment case, it could be a spark to better position it over the long run…The $3 billion purchase price seems pretty steep for a business that may not have made any money and probably won’t for some time.” — UBS analyst Michael Lasser

• The deal offers Walmart talent, competitive insight into Amazon’s operating model, a new largely urban customer base and “an emerging third-party marketplace platform with above market growth rates.” — Keith Anderson, an analyst with Boston-based Profitero, tells NPR

• “There is no doubt that Walmart would pay a premium for Jet and the acquisition will not come cheaply. However, the deal would provide Walmart with immediate access to a rapidly growing part of the market at a time when its own ecommerce growth is disappointingly slow. Even so, on the digital front Walmart still has much work to do before it catches up to the ever growing behemoth that is Amazon.” — The Conlumino TeamMB