Walmart announced yesterday that it is selling its UK supermarket business Asda in a $10 billion deal. The company will be merged with Sainsbury’s, a larger rival. Walmart will receive $4.1 billion and a 42 percent stake in the merged company.

CNN suggests  that the retreat from Europe could be part of an attempt to invest in India:


The sale of Asda follows Walmart’s exit from Germany, its other major outpost in Europe, in 2006.

Walmart could use the cash to fuel its expansion in other international markets. The US retailer is reportedly close to agreeing to invest in India’s Flipkart, an online retailer that has also attracted attention from Amazon.

More analysis from Forbes:

The shift comes three months after Walmart appointed Judith McKenna as the new head of its international business and seems to be an attempt to revamp the under-performing unit. Although more than half of the company’s stores are outside the U.S., the international business brings in only about a third of revenue. In the U.K. and Brazil, where it is downsizing to the tune of hundreds of locations, the company has struggled for years. Meanwhile, the potential deal with Flipkart would give Walmart the foothold in India it has been seeking.

In Walmart’s press release, CEO Doug McMillon stated:


We believe the Combination offers a unique and exciting opportunity that benefits customers and colleagues. As a company, we’ve benefited from doing business in the UK for many years, and we look forward to working closely with Sainsbury’s to deliver the benefits of the combination.