Flipkart’s board of directors have finally taken the audacious step and decided that they are ready to sell 75% stake of the company to the US-based Retail giant Walmart for $ 15 billion. This is definitely a big stride from any American company towards investment in an Indian tech company. Anonymous people tipped off on the news to Bloomberg, saying that Google’s parent company Alphabet would also likely back Walmart on this deal and that SoftBank Group Corp. would sell all of its 20-plus percent stake in Flipkart via an investment fund for this deal to go through. The entire transaction would be valued at around $20 billion they said. The tipsters also did not forget to add that even though a final decision can be expected on this deal within ten days, the terms of the deal could still change and in fact, they also added that the entire plan for the acquisition might also crumble down.
If this deal goes through successfully, it would mean a defeat for the American e-commerce giant Amazon, which has also been trying to get hold of Flipkart’s leadership in an attempt to solidify its position in the Indian online retail sector as the sole winner. It is still a known fact that Amazon stays as the second largest e-commerce company in India after Flipkart. After this decision by the board members of Flipkart, it is much more likely that Walmart is going to win the deal. If Walmart assumes the leadership of Flipkart in India, Amazon might be in for some trouble from a tough competitor.
Walmart, which is the world’s largest retailer has been in a close race with Amazon ever since its inception. The e-commerce giant has drastically affected store sales for Walmart, and with this latest acquisition, the company will look for opportunities to rebuild its reputation in the high-growth market of 1.3 billion people. After China, where sadly for both the companies, Alibaba has irreversibly established its strong-hold, India is the biggest market in Asia which might become a launch-pad for either of the e-commerce giants.
Arvind Singhal, Chairman of the New Delhi-based retail consultancy Technopak Advisors, shared his thoughts on the development saying “Flipkart is key to a global e-commerce strategy,” he also added, “Walmart clearly doesn’t want to be left behind in the race as India is a critical piece.”
When asked further questions about the new investment, SoftBank Group shied away from making any statement in response. Rest of the participants of the deal Flipkart, Walmart and Google also didn’t respond in the fastest way to the question about company’s acquisition.
While Walmart is already in talks with Flipkart to take the deal forward, there is no denying the fact that Amazon still remains as competition to its Indian counterpart. With Jeff Bezos pumping $5.5 billion dollars into Amazon India and under the leadership of the local chief, Amit Agrawal the company has touched superior levels in the country and will probably continue to do so.