Walmart Acquires 77% Stakes in Flipkart for $16 Billion
Walmart Inc has agreed to pay $16 billion for 77% stakes in India’s largest commerce website Flipkart. The remainder of the business will be held by some of Flipkart’s existing shareholders including Flipkart co-founder Binny Bansal, China’s Tencent Holdings Ltd, Tiger Global Management LLC and Microsoft Corporation.
It is worth to note that the deal is Walmart’s biggest buyout in online space and it makes sense in a country with population of 1.3 billion. India’s e-commerce market is growing with Flipkart enjoying majority of market share. India’s e-comemrce market is expected to grow to $200 billion by 2026. That is the reason Walmart has made this move.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer in a statement .
This deal will help Walmart to directly enter in Indian market and still have a lead over the biggest rival Flipkart. The deal will also give additional capital and retail muscle to fight Amazon.
Walmart has been trying for grab the Indian market for long. It once trued to open stores across hundreds of locations in country but counts’t because India doesn’t allow FDI in multibranded stores. Walmart entered in Indian market back on 2009 when it made a joint venture with Bharti Enterprises and later took full control of it in 2013. Walmart is currently operating 20 wholesale clubs in India that serve small businesses. Now it has directly jumped into the online shopping market that is growing in country.