Walmart acquires Flipkart’s 77% stake in $16 Billion

Walmart entered in India|Buys 77% stake in Flipkart for $16 Billion
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Walmart acquires Flipkart’s 77% stake in $16 Billion

Date : May 10, 2018

US retail giant Walmart will acquire 77% stake in the Indian e-commerce firm Flipkart. The deal is worth a total of $16 billion. It is one of the largest acquisitions ever in India. It also ranks as the biggest purchase of an e-commerce company. Walmart has also pledged an additional $2 billion in investments to Flipkart. With this, the total value of the Indian company will near $22 billion.

Background of Walmart

Walmart has been looking to expand into Indian markets to compete against expanding rivals Amazon. Reports suggested that Walmart was initially looking for a minority stake and was in dialogue since September 2016. However, it was Greg Panner, Chairman of the Walmart board, that insisted on acquisition. He is the grandson of founder Sam Walton.

Acquisition of  Flipkart by Walmart

The acquisition beats out the Bharti-Indus Towers merger which was a mere $14.6 billion. However, the recent Vodafone-Idea merger is expected to be around $23 billion. Of the two founders of Walmart, Sachin Bansal will no longer hold any shares. Binny Bansal, however, will still be invested with the company, owning the remaining 23% of the stocks.

Aftermath of Acquisition of Walmart

Walmart has announced that it has no plans of changing the Flipkart brand. Walmart assured the company that it will only supplement with supply chain skills and sourcing. The US NASDAQ reacted negatively to the news of the acquisition.

US retail giant Walmart will acquire 77% stake in the Indian e-commerce firm Flipkart.

Walmart’s stock fell by almost 4%. This wiped out $4 billion off its total market capitalisation of $242 billion. Both companies have also stated that they want more investors on board. Talks with Google Alphabet have been ongoing in this regard. For the consumers, the ongoing war between Walmart and Amazon will mean better e-commerce services. The share of e-commerce is expected to go up.

India has one of the largest and fastest growing market for retail services. It has a total population of 443 million young adults born after 1990, a key demographic for these companies.

 E-Commerce Platforms – Quick Facts

  • The deal is the single biggest private equity and venture capital investors in the country. They made about $14 billion in the deal.

India has one of the largest and fastest growing market for retail services.

  • Sachin and Binny Bansal, graduates of IIT Delhi, are ex-Amazon employees. They quit their jobs to found Flipkart.

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  • Amazon boasts of about 300,000 sellers on its platform.
  • Flipkart is second with upwards of 100,000.
  • Paytm Mall is a distant third.

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