Wal-Mart is currently in the middle of a stock buy-back, which implies that management believes their shares are undervalued. From that perspective, using undervalued shares to purchase an asset would mean using too many shares to do the purchase, resulting in wasted money.
The inverse of this is why companies with "overvalued" stock fund acquisitions with stock.
bad yield on cash right now. Interest rates are low, so buying a company with greater ROE than near-zero interest rates is probably good. Unlike many big tech companies, Walmart also has plenty of debt already, their June filing indicated ~$39.4 billion in long-term debt, so adding to that is less appealing than just paying cash. Note: they could do what MSFT did with linkedin and later change their mind and issue debt, since it is very inexpensive to borrow, and Walmart has a good credit rating.
In startupland, one typically buys another with stock because they don't have much cash and their stock is arguably overvalued. In real business-land, cash is pretty common.
Of course not, it will be a very large novelty check. /s
But why cash or at least 100% cash? Just seems weird to me that at least some of it wasn't in stock. Is it because Jet was still private, so any stock in the deal would have been immediately liquidated by the VCs?
> But why cash or at least 100% cash? Just seems weird to me that at least some of it wasn't in stock. Is it because Jet was still private, so any stock in the deal would have been immediately liquidated by the VCs?
Because Wal Mart has lots of cash and that's what Jet.com shareholders wanted instead of WMT shares? Lots of deals by established companies are in cash and in the current environment where you're not getting any meaningful interest on cash that will continue to be a common thing.
