M&A fail: Walmart-Cornershop deal falls through

Walmart's US$225mn acquisition of grocery delivery app Cornershop, announced last September, has been scrapped, following a decision earlier this month by Mexico's antitrust regulator to reject the deal.

The US-based retailing giant bought the platform – which has 11,000 active shoppers who buy groceries and deliver them to the users' homes in Chile and Mexico – to increase the online sales of Walmart de México, the country's largest retailer, and compete with Amazon.

But in early June, anti-trust regulator Cofece blocked the transaction because it would allegedly hurt competition in the retail delivery market. Another inherent danger was that Walmart would have access to the information of purchases made at rival stores that work with Cornershop.

"I'm confirming that our acquisition by Walmart is not happening due to the decision by Mexican regulators. We respect their decision and there was no going back from it," Cornershop CEO Oskar Hjertonsson said via Twitter late Tuesday.

Walmart and Cornershop could have appealed, but there was no guarantee the watchdog would have reversed its decision.

Walmart has nearly 2,500 stores in Mexico, where online sales only account for 1% of its revenue. It will continue to work with the application as part of a commercial agreement.

And what's next for Cornershop?

One likely scenario is that the platform founded by Hjertonsson and fellow entrepreneurs Daniel Undurraga and Juan Pablo Cuevas in 2015 raises more capital to undertake a regional expansion.

A 2018 report by investment fund All Venture Partners said the app, which has partnerships with 150 stores in Chile and Mexico, would eventually seek to expand to Argentina, Brazil, Colombia and Peru.

If Cornershop can become as ubiquitous in the region as Colombia's delivery app Rappi, then it too could aspire to unicorn status and command an acquisition price much higher than US$225mn.