Walmart Inc. announced yesterday that it has signed a definitive agreement to become the largest shareholder in Flipkart Group, an e-commerce company headquartered in Bengaluru, India that's a leader in electronics, large appliances, mobile, and fashion and apparel. Walmart will buy an initial stake of roughly 77 percent in the company for $16 billion, while the remainder of the business will be held by its existing investors, including co-founder Binny Bansal, Tencent, Tiger Global and Microsoft. Walmart said the deal, its largest ever, will help accelerate Flipkart's customer-focused mission to transform commerce in India through technology, while underscoring Walmart’s commitment to sustained job creation and investment in India, one of the largest and fastest-growing economies in the world. Flipkart will leverage Walmart’s omnichannel retail expertise, grocery and general merchandise supply chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe. The deal is subject to regulatory approval in India. While Walmart and Flipkart will leverage the combined strengths of both companies, they will maintain distinct brands and operating structures.
Total Retail's Take: The Flipkart investment aligns with Walmart's vision to grow internationally, particularly in markets with significant long-term opportunity. With its purchase of Flipkart, Walmart becomes the e-commerce leader in a country with more than 1.3 billion people, strong GDP growth, a growing middle class and significant number of smartphone users. What's more, Walmart expects e-commerce to grow at four times the rate of overall retail in India, and Flipkart is uniquely positioned to meet the needs of the growing number of online consumers through localized service, deep insights into Indian customers, and a best-in-class supply chain. And perhaps most importantly, it won its battle with its chief rival, Amazon.com, for control of Flipkart.