Walmart has announced a deal worth about $16bn to take a majority stake in Flipkart, India’s largest online retailer. If the deal goes through, Walmart will buy about three-quarters of Flipkart’s shares at a valuation of just under $20bn and will set up a fight with its US rival Amazon. It is being described as the biggest eCommerce deal in the world!
The acquisition will be the biggest foreign direct investment in Indian history, surpassing a Russian-led consortium’s $12.9bn buyout of refiner Essar Oil agreed in 2016. It comes as Walmart overhauls its international strategy, having ceded control of its UK subsidiary Asda last week through a merger with Sainsbury’s. Walmart and Flipkart declined to comment.
Founded in 2007 by Sachin and Binny Bansal, two former Amazon workers, Flipkart grew rapidly by emulating the strategy used by their erstwhile employer in the US from the 1990s onward, starting by offering books before expanding into electronics and other goods. The competitive field strengthened dramatically in India in 2013 with the arrival of Amazon, which has committed $5bn of capital to its Indian operation.
Regardless, Flipkart maintained its lead in volumes with the help of strong financial backing from its largest investor, New York-based Tiger Global Management, which was joined early last year by US groups Microsoft and eBay, along with Tencent of China.
The Vision Fund run by Tokyo-based SoftBank, which invested $2.5bn in Flipkart last August, will sell that entire holding, while Tiger Global will sell most of its holding but retain a 5 percent stake.
This is India’s first billion-dollar e-commerce company. Flipkart, sells 8 million products across 80-plus categories. It has 100 million registered users.
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