Walmart has officially confirmed that an agreement has been signed to acquire 77% stake in Flipkart for about $16 billion. However, the remaining stake will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
As, per Walmart the immediate focus will be on serving customers and growing the business, as the investment will help accelerate Flipkart’s customer-focused mission and transform ecommerce in India through technology. The Walmart will also supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future. At the same time it also fulfills Walmart’s commitment to sustained job creation and investment in India.
Doug McMillon, Walmart’s president and, the chief executive officer commented:
India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading a transformation of eCommerce in the market. As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global, and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.
This fiscal year that ended on March 31, the Flipkart recorded GMV of $7.5 billion1 and net sales of $4.6 billion representing more than 50 percent year-over-year growth in both cases. Now, with the investment from Walmart Flipkart will leverage Walmart’s omni-channel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength. Because, Walmart India currently operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India. While, Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe. Both the companies will maintain distinct brands and operating structures.
Binny Bansal, Flipkart’s co-founder, and group chief executive officer commented:
This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India. While eCommerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and eCommerce to the fore.
The Walmart’s investment in Flipkart also includes $2 billion of new equity funding, and they said that it intends to use a combination of newly issued debt and cash on hand. They have also confirmed that Tencent Holdings Limited and Tiger Global Management LLC will continue on the Flipkart board, while new members from Walmart will join the board.
The acquisition is subject to regulatory approval in India and is expected to close by the end of this year.