A "WalMart supercentre" logo above the entrance to an Asda supermarket in the UK | Bloomberg
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Walmart is venturing into other ambitious deals in the international market, but the payoff will take patience. 

Walmart Inc. is starting to make moves that reveal its international ambitions.

The retailing giant has agreed to sell its U.K. grocery chain, Asda, to rival J Sainsbury PLC in a transaction worth about $10.1 billion. Walmart will retain a 42 percent stake in the combined company.

That splashy deal comes amid signs Walmart is considering other big changes to its global portfolio. Bloomberg News has reported the company is in advanced talks to spend at least $12 billion on a majority stake in Flipkart, an emerging e-commerce force in India. Walmart is also reportedly exploring selling a large stake in its Brazil business.

Walmart investors gave the deal with Sainsbury a polite clap, sending shares up more than 2 percent in early trading on Monday. And chatter about a Flipkart deal hasn’t done much to nudge Walmart’s stock in recent weeks.

In some ways, I suppose that makes sense; the U.S. is still Walmart’s largest market and accounts for the majority of its operating income. But don’t let the relatively stable share price lull you into thinking these moves aren’t significant. Together, they signal Walmart is thinking differently about risk and reward and is prudently focusing more on the long game.

First, consider the Asda deal. There wasn’t enormous risk for Walmart in keeping the chain. It has said that while the U.K. is not its most profitable market, Asda generates a good bit of cash simply because it’s such a large business.

But there also wasn’t a particularly awesome potential reward for hanging onto full ownership of Asda. The U.K. is a mature market for groceries, so racking up more sales there is largely a matter of fighting for market share.

And Asda doesn’t look particularly well-positioned for that battle. Yes, its comparable sales growth has perked up a bit in recent quarters. But if you look at its performance over the longer term, it’s clearly been rocked by competition from hard discounters Aldi and Lidl, and that pressure won’t let up anytime soon.

Next, consider what Walmart is reportedly poised to do with Flipkart. The risk in this case is fairly high. Paying $12 billion or more for a majority stake would be Walmart’s biggest acquisition ever, according to Bloomberg data. (That would top the $10.8 billion deal it struck in 1999 to buy — wait for it — Asda.)

But India is also a place where the possible reward is huge. E-commerce is expected to grow explosively there, and it’s a market Amazon.com Inc. has not yet dominated.

An investment in Flipkart will demand a great deal of patience. The payoff — if there even is one — will almost certainly not be instantaneous. But at this point in its quest to conquer e-commerce, Walmart needs dramatic action, and the Flipkart deal would qualify.

It makes sense for Walmart to run toward bigger prizes overseas, because that’s also what it has been doing lately at home. It has pulled back marketing spending from its fledgling Jet.com brand, for example, and instead is focusing on trumpeting its flagship Walmart.com site.

It remains to be seen whether these efforts pay off. But at least no one can accuse the team in Bentonville, Arkansas, of being complacent.

—Bloomberg Gadfly

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