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Mexican authorities halt Walmart from acquiring Cornershop

This post is also available in: esEspañol (Spanish)

Contxto – Tuesday afternoon, the Mexican Federal Commission of Economic Competence (Cofece) announced its opposition over Walmart acquiring the Mexican-Chilean startup, Cornershop.

In Summary

Walmart stated that it was acquiring Cornershop for US$225 million in 2018. The goal was to sell the delivery startup to Walmex, the Mexican and Central subsidiary. However, that scheme seems to be facing serious road bumps based on today’s news.

According to a statement from Walmart Mexico to the Mexican Stock Exchange, “Walmex informed its shareholders and the investing general public that Cofece notified its majority shareholder, Walmart Inc., of its opposition to the purchase of Cornershop, Inc.”

Meanwhile, the retail giant is analyzing viable solutions and feasible regulatory alternatives or measures to continue pursuing the acquisition.

In-Depth

In September, Walmart declared that this specific transaction was “very special for Walmex.” If successful, it would make the enterprise one step closer to becoming the largest omnichannel retail store in the country.

Not everyone seems pleased with the results so far.

“They notified us today and we will analyze measures that we will adopt,” said Gabriela Buenrostro, Deputy Director of Corporate Communication at Walmart Mexico and Central America.

“We are disappointed since we are sure that this operation is positive both for the competitive environment and the consumer. That drives the development of electronic commerce in Mexico.”

Contxto reached out to Cornershop officials and other parties involved to better understand the situation.

El Financiero also tried to contact Cofece, but still hasn’t received an official response, either. Under the Law of Economic Competition, the agency apparently can’t make any official statement for 24 hours until all “economic agents” are notified.

Update:

Following this, Mexican authorities cited the Federal Law of Economic Competition. This allows the involved parties to potentially modify the agreement and request better conditions to proceed with the operation. Nonetheless, Cofece released a statement saying that the presented conditions did not suffice.

“In this case, the commitments proposed by Walmart and Cornershop were insufficient to avoid the possible negative effects of the merger,” it explained. Also, it said that “the economic agents requesting the concentration have the right to go to the Judicial Branch of the Federation so that the legality of the commission’s action can be reviewed through an indirect injunction trial.”

We’re still looking out for more information.

-VC

Victor Cortéshttps://www.contxto.com/
CEO & Co-Founder of Contxto. Passionate about tech, startups and venture capital. I eat sushi five times a week.

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