Walmart to sign big deal for stake in e-commerce co Flipkart

U.S. retail giant Walmart is likely to buy a majority stake for $10-12 billion in the Indian e-commerce player Flipkart by the end of June as part of its online business strategy, Reuters reported.

The development in the Indian e-commerce segment indicates that Amazon will not be able to grab its main rival Flipkart in India.

Investors of Flipkart are concerned that any deal with rival Amazon would run into regulatory hurdles as a combination would have more than 70 percent of India’s online retail market.

Amazon’s affiliate earlier picked up $27.6 million stake in Indian retailer Shopper’s Stop.

Amazon also bought grocer Whole Foods Market for $13.7 billion last year as part of its investment strategy in the United States.

Walmart completed its due diligence on Flipkart and had made a proposal to buy 51 percent or more of the Indian company for between $10 billion to $12 billion.

A deal with Flipkart would step up Walmart’s battle with for a bigger share of India’s e-commerce market. Morgan Stanley estimates that India’s e-commerce market will be worth $200 billion in a decade.

SoftBank Group of Japan, which owns roughly one-fifth of Flipkart, is unlikely to sell any of its shares due to the low price being offered for the existing shares.

Early investors such as Tiger Global, Accel and Naspers will likely sell their entire stakes in Flipkart to Walmart. Flipkart has also received investment from eBay, Tencent Holdings and Microsoft.

Walmart has for years tried to enter India but has remained confined to a ‘cash-and-carry’ wholesale business amid tough restrictions on foreign investment. It currently operates 21 such stores in India.

By comparison, Amazon closely trails Flipkart, which along with its fashion units controls nearly 40 percent of India’s online retail market, according to estimates by researcher Forrester.

Former Amazon employees Sachin Bansal and Binny Bansal founded Flipkart in 2007 in India’s tech hub of Bengaluru.

Like Amazon’s founder Jeff Bezos, they began by selling books, but have diversified rapidly, including by selling smartphones, such as those made by China’s Xiaomi, through exclusive flash sales, and now compete with Amazon in almost all product categories.

Related News

Latest News

Latest News