Walmart to Invest $16B in Flipkart
Walmart has confirmed that it will pay ~$16B for an initial stake of approximately 77% in Flipkart, India’s biggest online retailer. The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart cofounder Binny Bansal, Tencent, Tiger Global Management and Microsoft. The deal is expected to close later this year subject to regulatory approval. As part of the deal, Walmart will invest $2B into Flipkart. Both companies will maintain separate brands and operating structures.
“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. As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. 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” – Walmart’s President and CEO, Doug McMillon.
Founded in 2007, Flipkart, through its supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily. In comparison, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India. As of now, Flipkart operates at a loss as it pursues growth.
“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India. While eCommerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and eCommerce to the fore” – Flipkart’s cofounder and Group Chief Executive Officer, Binny Bansal.
Bottom Line: the battle between Walmart and Amazon goes to India.