Walmart set to acquire 73 percent stake in Flipkart, edges Amazon

04 May, 2018, 14:53 | Author: Sally Reid
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It's now unclear if Flipkart favors one offer over the other, but it's possible that it has a preference between competing for the lead in the market alongside Walmart, and immediately becoming the dominant e-tailer in India in conjunction with Amazon.

The acquisition of Flipkart has been a talk of the country that has kept the Indian e-commerce industry on its toes, but it seems that a deal has finally been finalized.

Walmart's investment would give Flipkart not just additional funds to fight Amazon, but also arm it with a formidable ally with extensive experience in retailing, logistics and supply chain management. Tech giant Google's parent company Alphabet Inc would also tag along with Walmart for an investment in Flipkart. Walmart has already floated a shareholder agreement, or offer proposal, and is looking to shell out about $10 billion to $12 billion for the stake that would value Flipkart at roughly $20 billion, one of the sources familiar with the matter told news agency Reuters.

Walmart would maintain a focus on the grocery market, said the sources, suggesting that nearly 50% of Walmart's initial investment would be funneled into building a food and grocery supply chain. While Google will reportedly invest $3 Bn, SoftBank which had invested $2.5 Bn past year may have to exit from Flipkart at $4 Bn.

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No final confirmation has, however, been made by any of the parties involved in the deal.

The sources added that Sachin Bansal, founder of Flipkart, was in the United States last week to oversee final lap negotiations with Walmart. TOI reported on May 3 that, while SoftBank wanted to bring in Amazon and merge Flipkart's operations with the Jeff Bezos-led ecommerce behemoth, the proposal did not find much favour with other older investors in the company.

Earlier, Inc42 reported that Amazon had reportedly raised an offer to buy 60% stake in the homegrown ecommerce giant. The Bansals together own around 10 per cent stake in Flipkart, which makes them collectively worth around $2 billion. Flipkart is the biggest e-commerce destination in India and the Walmart deal will only help it replenish the war chest and battle with Amazon for market dominance.

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