Walmart buys 77% stake in Flipkart for $16 bn

Walmart is acquiring Flipkart for a controlling stake Softbank’s CEO

The buyer was U.S. bricks and mortar retailer Walmart, which on Wednesday announced that it had acquired 77% of Indian e-commerce firm Flipkart for $16 billion, valuing the e-commerce player at over $20 billion. Earlier on Wednesday, Soft- Bank chief executive officer Masayoshi Son unexpectedly spilled the beans on the deal by confirming on a conference call that Walmart had chose to purchase Flipkart, ahead of the highly-anticipated official announcement.

USA supermarket chain Walmart is making a major play for India's e-commerce market, dishing up USD$16bn (£11.82bm) for a 77% stake in local player Flipkart.

"Walmarts investment includes United States dollars 2 billion of new equity funding, which will help Flipkart accelerate growth in the future", the US-based firm said in a statement.

"For Walmart, this is the only way left to enter the Indian market and they are paying a premium for the access", said Satish Meena, a Forrester analyst based in New Delhi.

The world's largest retailer will acquire a 77% holding in Flipkart Group for $16 billion, the companies said earlier on Wednesday. Flipkart co-founder Sachin Bansal made a decision to leave the startup he co-founded with Binny Bansal in 2007. Small physical shops and online sellers on Flipkart will likely be very wary of Walmart's entry into India as the company is known for eating into sales with cut-rate prices.

Up until yesterday, the country's e-commerce battlefield witnessed the intense competition between Amazon, an American giant and India's own Flipkart. The traders' lobby, a key vote bank for the BJP, is upset with the deal, with the Rastriya Swayamsevak Sangh-affiliate Swadeshi Jagran Manch (SJM) and other groups, such as the Confederation of All India Traders, launching a campaign to block the deal that will pit Walmart against Amazon in the Indian market.

Amazon boss Jeff Bezos has committed more than $5 billion to grabbing a big slice of India's e-commerce pie after failing to make inroads in China.

More news: Summary of NMC Health Plc (LON:NMC) Ratings

Walmart's interest in investing in the Bangalore-based firm was first reported in 2016, and a deal would boost its firepower in a battle with Amazon (AMZN) in the world's fastest growing major economy.

He started his career with an IT firm Techspan in 2005 and then joined Amazon Web Services in January 2006. The country's population of over 1.3 billion remains a mostly untapped market for online retailers.

There has been months of speculation that Walmart was preparing to buy Flipkart but both have repeatedly declined to comment on the talks.

In a note released before the Walmart-Flipkart deal was confirmed, Forrester's senior forecast analyst, Satish Meena, said the acquisition would make "the best investment option" for the USA supermarket chain and boost Flipkart's competitive edge. McMillon is expected to outline its India strategy to Flipkart's employees. The discounts will be largely subsidised by Walmart's shareholders.

Walmart India now operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India, with more than 95% of sourcing coming from India. Bricks and mortar retailers were not threatened and many dismissed e-tailing as a foreign concept saying that Indians want to touch and feel' whatever they buy.

Walmart isn't new to India.

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