• The Wall Street Journal has a story about how Walmart's $3.3 billion acquisition of Jet could jeopardize Jet's ability not to charge sales tax in most states.
The reasoning is pretty simple. "A 1992 Supreme Court ruling allows online retailers to avoid collecting sales taxes in states where they don’t have a physical presence like a warehouse, a local store or office," the Journal writes, which has allowed Jet, a company with limited physical facilities to this point, to say that it was cheaper because it did not have to charge such taxes. But Walmart has physical facilities everywhere, so that advantage could be erased.
Experts say that to some extent, it may depend on how the deal is structured. But the larger likelihood is that Walmart and Jet believe that whatever the tax implications, the two companies are stronger together than apart as they try to compete with Amazon.
• Recode reports that when Walmart purchased e-commerce startup Jet for $3.3 billion, it locked in Jet founder Marc Lore for at least five years, with the contract stipulating that "if Lore doesn’t stay for all five years, he’d forfeit a chunk of his giant payout both in cash and stock. A portion of the $3 billion in cash Walmart is coughing up will be paid out over five years. The same goes for the additional $300 million in stock tied to the incentive plan for Lore and other Jet executives."
The reasoning is pretty simple. "A 1992 Supreme Court ruling allows online retailers to avoid collecting sales taxes in states where they don’t have a physical presence like a warehouse, a local store or office," the Journal writes, which has allowed Jet, a company with limited physical facilities to this point, to say that it was cheaper because it did not have to charge such taxes. But Walmart has physical facilities everywhere, so that advantage could be erased.
Experts say that to some extent, it may depend on how the deal is structured. But the larger likelihood is that Walmart and Jet believe that whatever the tax implications, the two companies are stronger together than apart as they try to compete with Amazon.
• Recode reports that when Walmart purchased e-commerce startup Jet for $3.3 billion, it locked in Jet founder Marc Lore for at least five years, with the contract stipulating that "if Lore doesn’t stay for all five years, he’d forfeit a chunk of his giant payout both in cash and stock. A portion of the $3 billion in cash Walmart is coughing up will be paid out over five years. The same goes for the additional $300 million in stock tied to the incentive plan for Lore and other Jet executives."
- KC's View:
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I wonder what the betting odds might be that Lore will remain happily within the Walmart system for five years. When you;re talking about hundreds of millions or billions of dollars, exactly how much is a "chunk?" And once you have a certain amount of money - let's say a hundred million bucks - how important is it to stick around a place if you're not happy?
I'm just asking.
