US retail giant Walmart Inc has agreed to buy a controlling stake in Flipkart, according to Masayoshi Son, chief executive of Softbank, the largest investor in India’s largest e-commerce marketplace.
The Japanese investment giant had put $2.5 billion into Flipkart last August for around 20 per cent stake, which will now be worth around $4 billion, Son said at an earnings webcast on Wednesday. He did not elaborate any further on the terms of the deal.
The deal, expected to be announced later this evening is pegged to be the biggest transaction in the online retail sector globally. It will allow Walmart to gain a foothold in the fast-growing online retail market in India and also give it a leg up over rival Amazon, which continues to lag behind Flipkart.
India is the third-largest market after the US and China in terms of retail. Walmart has struggled to match Amazon in its home market of the US and it isn’t breaking any records in China, either. India is touted to be the last large open market in the world and the deal to acquire Flipkart is in line with the aim of capturing this market.
Walmart had previously dabbled with the possibility of opening stores in India, but restrictive regulations and a failed partnership with Bharti Group largely kept it out. Flipkart will give Walmart an entry into India, even if the company doesn’t push to open offline stores through the partnership, something which could be on the cards after the deal.
Apart from Softbank, another major Flipkart investor expected to exit completely after the deal is Naspers. Tiger Global and Accel Partners, among the earliest investors in the firm, could sell most of their stake in the Indian company but retain a small amount after the transaction. – Business Standard