Walmart Takes More Stake in Flipkart from SoftBank

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Walmart Takes More Stake in Flipkart from SoftBank

05/23/2018

Walmart is purchasing a 20 percent stake in Flipkart from Japanese holding company SoftBank Group, following its agreement to purchase the majority stake in the Indian ecommerce behemoth, CNBC has reported.

Terms of the sale were not disclosed. However, the stake is worth around $4 billion, the news outlet reported.

Earlier this month, Walmart said it would pay $16 billion for about 77 percent of Flipkart, which is said to be the Bentonville, Ark.-based retailer’s largest deal ever. The potential in food retailing abroad is strong, as Flipkart reportedly controls 40 percent of India’s online retail and is seeking to enter the grocery market, according to CNBC.

Walmart’s agreement earlier this month made official its plan to take advantage of a huge opportunity in India, which Walmart CEO Doug McMillon called one of the world’s most attractive markets, given its size and growth rate. The fastest-growing economy in 2018, India currently has a growth rate of 7.4 percent that should rise to 7.8 percent in 2019, the Economic Times of India said. 

The agreement also serves a severe blow abroad to Amazon, which already has a share of 27 percent in India’s ecommerce market. The Seattle-based ecommerce giant had counterbid Walmart for a 60 percent stake in Flipkart, though reports said the Indian online retailer had been leaning toward selling to Walmart the whole time.

By snatching the majority stake in Flipkart, Walmart has become the new ecommerce leader in India, and could very well outdo Amazon in serving the country’s 1.3 billion citizens’ online grocery needs.

“Amazon has committed $5.5 billion to India, so it was only a matter of time before they took over as the leader,” Dan Neiweem, co-founder and principal of Chicago-based digital solutions provider Avionos, said at the time of the deal earlier this month. “If Walmart didn’t make this move now, they would be likely to spend way more to get into the market.”

Added Judith McKenna, president and CEO of Walmart International, earlier this month: “This investment aligns with our strategy, and our goal is to contribute to India’s success story as we grow our business. Over the last 10 years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products. With Flipkart and the other shareholders who have come together, we will continue to advance the winning ecommerce ecosystem in India.”