Numerous reports in recent times stated that Walmart is looking to buy a majority stake in India’s leading e-commerce portal Flipkart. Today, a new report published by Bloomberg cites that Walmart is close to finalising the deal of acquiring a major stake in Flipkart for at least $12 billion. The necessary agreements for the same will be completed in the next two weeks, as per the people familiar with the matter. It is also revealed that all the major Flipkart investors are now on board with the Walmart purchase. Earlier, Amazon also tried to purchase a stake in Flipkart, but now, Flipkart’s board is ready for Walmart’ stake purchase.
“Tiger Global Management will sell nearly all its 20% stake in Flipkart, while SoftBank Group Corp. will sell a substantial part of its 20%-plus holding, the people said. Walmart will likely end up with 60% to 80% of Flipkart, which will be valued at about $20 billion,” reported Bloomberg.
And the key issue post the stake sale will be ‘what happens to Flipkart’s founders.’ “The amount each existing investor sells and the size of Walmart’s final stake still need to be finalised. It’s also possible that terms will change or the talks will fall apart,” persons familiar with the matter told the publication.
The deal, if goes on, will give Walmart a significant lead in one of the fastest growing e-commerce markets across the world. It will be interesting to see how Flipkart will change under Walmart because the latter is the largest retailer in the world, but it’s losing the ground to online retailers such as Amazon.
Furthermore, it’s also reported that Flipkart’s board met very recently to discuss the proposals made by Amazon and Walmart and they’re now in a mindset that the Walmart deal could be closed more easily.
Amazon has recently lost its battle in China and its complete focus in now on the Indian market. But Flipkart’s primary rival is Amazon India itself, and it’s hard to imagine Amazon buying stake in Flipkart.
Flipkart is already the most valuable startup in India and if the Walmart deal goes through, it will be the biggest in the Indian e-commerce history.