Flipkart-Walmart deal nears closure as board approves sale of 75% stake to US retail giant for $15 bn

Mumbai: E-commerce firm Flipkart’s board has approved a deal to sell an equity stake of about 75 percent in the company to a group led by Walmart Inc for about $15 billion, Bloomberg reported on Friday, citing unnamed sources.

SoftBank will sell its 20-plus percent stake as part of the deal, Bloomberg said, adding Google’s parent Alphabet Inc was likely to participate in the investment with Walmart.

A final close of the deal is expected within 10 days, although deal terms could still change and a deal isn’t certain, Bloomberg reported.

Flipkart and Alphabet did not immediately respond to requests for comment. Walmart and SoftBank declined to comment.

Reuters reported last month that Walmart was close to buying a majority stake in Flipkart, Amazon’s biggest rival in India, for $10 billion to $12 billion.

Earlier this week, Indian TV channel CNBC-TV18 reported that Amazon.com Inc has made a formal offer to buy 60 percent of Flipkart. Amazon, which is Flipkart’s biggest rival in India, declined to comment on that report.

Flipkart and Amazon dominate the online shopping space in Asia's third-largest economy.

 Flipkart-Walmart deal nears closure as board approves sale of 75% stake to US retail giant for  bn

Sachin Bansal. Image courtesy: Flipkart

Flipkart had vetoed an approach from Amazon for a 51 to 55 percent stake in the company two years ago, a source told Reuters, judging its offered price as far too low at the time.

Meanwhile, the under-works Flipkart-Walmart deal has left merchants selling products through the e-commerce platform jittery as they claim to be clueless about the ongoing negotiations and its possible impact on their business.

Worldwide moves

Walmart and Amazon’s interest in gaining share in India comes after both retailers have struggled to grow in China, ultimately losing ground to Chinese e-commerce firm Alibaba Group Holding Ltd.

A successful move by Amazon to grab Flipkart would likely send Walmart back to the drawing board when it comes to India, retail consultants and analysts said.

“The stakes are really high for Walmart,” said Brian Yarbrough, senior research analyst with Edward Jones. “It will be very hard for them to win India back if they miss this opportunity.”

Investors expect faster returns from Walmart’s investments compared to Amazon, said Yarbrough, a move that limits the brick-and-mortar retailer’s ability to spend big on acquisitions in growth markets.

Sales from Walmart International, which runs about 6,300 stores globally, stood at $118 billion in the fiscal year ended 2018, down nearly 14 percent from 2014.

In an effort to fix its international performance, Walmart in January appointed Chief Operating Officer Judith McKenna to run its international unit and has indicated it will focus on its core North American markets and growth markets like China and India.

Its urgency to stem market share losses has seen it launch talks to merge its British arm Asda with Sainsbury’s.

In an interview with Reuters on Tuesday, McKenna downplayed analyst criticism that the company has been slow to move in India.

“We have been deliberate and thoughtful, we were not slow to respond,” she said.

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Updated Date: May 04, 2018 16:57:40 IST