Wal-Mart selling Chinese e-commerce business to JD.com

The deal creates a strategic partnership between the retail giant and JD.com, the second-largest online retailer in China.

Wal-Mart announced Monday that it's selling its Chinese e-commerce marketplace Yihaodian to JD.com, China's second largest e-commerce company.

The deal is part of a new strategic partnerships between the companies. It should help Wal-Mart gain more of a foothold in the Chinese market, both at its physical stores and online, while helping JD.com take on its biggest rival, Alibaba.

Under the agreement, JD.com will issue Wal-Mart about 145 millon new class A shares, representing about 5 percent of its total shares. While JD.com will take ownership of the Yihaodian platform assets, including the brand, website and app, Wal-Mart will continue to operate the Yihaodian direct sales business and serve as a seller on the Yihaodian marketplace. Additionally, Sam's Club China will open a flagship store on JD.com and offer same- and next-day delivery through JD.com's nationwide warehousing and delivery network. Wal-Mart will also be listed as a preferred retailer by JD.com, which is expected to drive traffic to Wal-Mart's brick-and-mortar stores in China.

JD.com plans to leverage Yihaodian's strong business in key categories such as grocery and household goods. Wal-Mart has viewed grocery services as the key to the growth of its e-commerce in the U.S. as well.

Wal-Mart took a controlling stake in Yihaodian in 2012 and acquired the remainder of the company last year.