Global retain giant Walmart is in final stage to pick up stakes in Indian e-retail company Flipkart, reports Economic Times. If the development comes to fruition, it would make Walmart directly take on Amazon in Indian e-retail space.
Initially, Walmart is likely to buy around 20-26% stakes, which they plan to increase to 51% to become majority share owners. ET quoting sources have reported, Walmart plans to buy shares from SoftBank, which has major investment in Flipkart.
The initial investment is pegged at $1-2 billion, and they may invest finally to the tune of $10-12 to get control of Flipkart. For secondary share purchase, to raise their stake Walmart is currently negotiating with Soft Bank and Tiger Global. Both have around 20% stake in Flipkart. Officials of none of the companies however confirmed the developments on record.
Walmart has been eyeing the Indian market for a very long time. But with Indian government's rather rigid policy on FDI in retail, Walmart is looking for Flipkart to etch their footprints in e-retail. It earlier made an agreement with Bharti in cash and carry retail space, which failed to make waves.
Flipkart is currently valued at $14.2 billion and is locked in an intense fight with Amazon to occupy the growing e-retail space in India, which is expected to only grow bigger in next few years.
For Bentonville, Arkansas-based Walmart, a deal would open a new front in its efforts to take on Amazon, giving the world's largest brick-and-mortar retailer access to an e-commerce market that Morgan Stanley has estimated will rapidly grow to be worth $200 billion in a decade. It would be part of a huge e-commerce push that has seen Walmart acquire a slew of start-ups including paying roughly $3 billion for online retailer Jet.com. Last month it also said it was partnering with Japan's Rakuten Inc in online grocery deliveries.
"As large as they are, Amazon has eaten away a significant chunk of their revenues and I think... they view India as the largest market possibly for this (taking on Amazon)," one of the sources said. Walmart has for years tried to enter India but has remained confined to a 'cash-and-carry' wholesale business amid tough restrictions on foreign investment. It currently operates 21 such stores in India.
With Reuters inputs
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