Walmart buys 77% stake in India's Flipkart for US$16 bln

The deal, announced in a joint statement, values Flipkart, India's largest e-tailer on the basis of sales, at just over $20 billion.

The deal completely redraws the e-commerce landscape in India and escalates Walmart's global battle against Amazon.com Inc., its biggest rival in the US.

"This deal will certainly affect the small retailers adversely".

Biyani is planning to sell at least 10 per cent stake of the company to a global retailer, according to an ET report.

Walmart entered India in 2009 through a joint venture with Bharti Enterprises, and took full control of that business in 2013. Amazon also faces stiff competition in China from Alibaba and JD.com.

Such is the force & magnitude of this mega-deal worth $16 billion (Rs 1.04 lakh crore), that it changes everything for Indian e-commerce and digital sector.

"We are actively working to shape the portfolio of geographies and businesses we're in, in order to set the company up for success for another generation", Walmart CEO Doug McMillon said during a conference call Wednesday. Walmart said it "supports Flipkart's ambition to transition into a publicly-listed, majority-owned subsidiary in the future".

Last year, eBay had invested over $500 million for a stake in Flipkart, and had sold its India business to the latter.

"Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs", he added.

In a statement released later that day confirming the deal, Walmart said its acquisition bid was subject to approval from Indian authorities.

Do you think Walmart did a smart thing by spending $16 billion to acquire Flipkart, compared to building their own portal? "With Flipkart and the other shareholders who have come together, we will continue to advance the winning eCommerce ecosystem in India".

This deal should catch the eye of a number of large, foreign strategic investors who have been eyeing India for a long time. This is an extension of Walmart's global expansion strategy.

"But strangely, Walmart is (attempting) using the e-commerce route to circumvent rules to attack Indian market". Sachin's exit is, however, seen to be affecting Flipkart's private label project named Billion, which sells branded smartphones, home appliances, and fashion products.

Meanwhile, Amazon is also still fighting hard in India, with founder Jeff Bezos saying last month that Amazon.in had the most-downloaded shopping app in India for 2017. Walmart will retain a 42 percent stake in the combined company.

Accel, one of the first investors in Flipkart, has earned a sevenfold return, including a 71-times return with its Accel India Fund.

Right now, Walmart is running 21 wholesale shops in India. Both of these numbers had increased more than 50% year-on-year.

While Amazon has missed out on an opportunity to buy out Flipkart, it will be business as usual for the world's largest online retailer. However, this does not mean that they will be forced to exit. "They should concentrate on specialization within their domains to build up a valuable cache of users seeking differentiated retail experiences", summed up Lee.

Pre-deal, Tiger Global Management held about 20 per cent stake in Flipkart.

Flipkart has had its fair share of challenges over the past few years despite being a hit among Indian consumers.


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