Touting as world’s largest e-commerce deal, retail giant Walmart has acquired India’s largest e-commerce store Flipkart. The deal is priced at $16 billion, thus shooting up Flipkart’s valuation to over $20 billion. It’s also the largest acquisition by Walmart, who is trying to take on Amazon.
After the deal, Walmart will have an initial stake of approximately 77 percent in Flipkart. Rest of the shares will be with Flipkart’s existing shareholders. This includes including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp. However, one of key founder Sachin Bansal will exit from Flipkart completely. In the near future, Walmart will help and support Flipkart’s ambition to transition into a publicly-listed, as a majority-owned subsidiary.
“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,” said Doug McMillon, Walmart’s president and chief executive officer.
“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,” said Binny Bansal, Flipkart’s co-founder and group chief executive officer. “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,” he added.
Key highlights of the Walmart-Flipkart deal
- Walmart pays $16 billion to acquire Flipkart.
- Walmart will have an initial stake of approximately 77 percent in Flipkart. Other shareholders in Flipkart include Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
- SoftBank will exit from Flipkart by selling its entire 20 percent stake. Sachin Bansal will also exit from Flipkart completely.
- Walmart and Flipkart will maintain distinct brands and operating structures. However, both companies will leverage the combined strengths of each other.
- Walmart will invest another $2 billion of new equity funding on Flipkart to accelerate growth in the future. Flipkart’s financials will be now reported as part of Walmart’s International business segment.
- Flipkart founders and the local executive team will continue to manage the business.
Walmart already operates in India with 21 Best Price cash-and-carry stores and one fulfilment centre in 19 cities across nine states in India. Backtracking Flipkart’s journey, the e-commerce store was founded in 2007. From that day, it has grown rapidly and earned customer trust to become India’s largest e-commerce store. It also operates other independent companies including Myntra, Jabong, eBay India and PhonePe. The supply chain arm of Flipkart – the eKart, serves more than 800 cities, making 500,000 deliveries daily.
Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart’s investment stake moving lower after the transaction is complete. One of the key name popping up is Google’s parent company Alphabet. However, Walmart would retain clear majority ownership. The Walmart-Flipkart deal is expected to close by end of this calendar year, subject to regulatory approval.