Walmart to buy controlling stake in Flipkart for $16 bn

Flipkart-Walmart deal today: 10 things to know

Walmart will buy a 77% stake in Flipkart, the United States retailer's largest-ever acquisition, as it attempts to shore up its worldwide online sales ambitions against the likes of Amazon.

While Flipkart has enjoyed primacy as India's homegrown retailer - going head to head with Amazon's own growing operations there - it's struggled to maintain profitability, despite a series of investments from overseas.

Amazon CEO Jeff Bezos has committed more than US$5 billion to grabbing a big slice of India's e-commerce pie after failing to make inroads in China.

"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", said Doug McMillon, Walmart's president and chief executive officer.

The Flipkart founder Sachin Bansal has made a decision to sell his stake for $1 billion to Walmart and move on from the company he founded eleven years back. Earlier on Wednesday, Soft- Bank chief executive officer Masayoshi Son unexpectedly spilled the beans on the deal by confirming on a conference call that Walmart had chose to purchase Flipkart, ahead of the highly-anticipated official announcement.

On Wednesday, Walmart bought a majority stake in Flipkart, valuing the company at $21 billion.




Sources had told Reuters they thought Amazon's approach to Flipkart was likely a ploy to complicate Walmart's bid.

Sachin Bansal, who co-founded Flipkart with his friend Binny Bansal in 2007, is estimated to have pocketed between $800 million (Rs5,381 crore) and $850 million (Rs5,717 crore) from the acquisition, according to e-commerce analysts.

The head of Japanese technology company SoftBank Group Corp. said it had reached a deal to sell its Flipkart stake to Walmart. However, Walmart has said that as it scales in India, it would support small businesses through direct procurement as well as by increased opportunities for exports through global sourcing and e-commerce. Walmart acquired a 77 percent holding in Flipkart for $16bn. India needs no introduction; it's a fantastically growing market.

Its investment will include $2 billion of new equity funding and the company said it remains in talks with other potential investors to join the funding round, Walmart said.

Walmart has been competing hard against No. 1 Amazon for years to be the king of e-commerce in North America. In exchange, Flipkart will leverage Walmart's omni-channel retail expertise, grocery and general merchandise supply-chain knowledge, and financial strength.

Walmart is trying to mitigate these concerns with plans to partner with local kirana owners to modernize their retail practices and transition to digital payments.

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