The board of Flipkart Online Services has approved an agreement to offer about 75 percent of the business to a Walmart-led group for approximately $15 billion (roughly Rs. 1 lakh crores), according to people knowledgeable about the matter, a massive bet by the American retailer on international expansion.
Underneath the proposed deal, SoftBank Group Corp. will sell most of the 20-plus percent stake it holds in Flipkart through an investment fund at a valuation of roughly $20 billion (roughly Rs. 1.33 lakh crores) , said the people, asking never to be named because the matter is private. Google-parent Alphabet probably will participate in the investment with Walmart, said among the people. Your final close is expected within 10 days, though terms could still change and a package isn’t certain, they said.
That could seal a Walmart triumph over Amazon.com, that has been trying to take control of Flipkart with a competing offer. Flipkart’s board ultimately decided a deal with Walmart is more prone to win regulatory approval because Amazon may be the No. 2 e-commerce operator in India behind Flipkart and its primary competitor. Amazon is out from the running unless Walmart hits unforeseen trouble.
If completed, the deal can give Bentonville, Arkansas-based Walmart a respected position in the growing market of 1.3 billion people and to be able to rebuild its reputation online. The world’s largest retailer has struggled against Amazon as consumers increase their spending on the Internet. India is the following big potential prize following the US and China, where foreign retailers have made little progress against Alibaba Group Holding.
SoftBank declined to comment. Flipkart, Walmart and Google didn’t immediately react to requests for comment.
Amazon has already been aggressively expanding in the united states on its own. Founder Jeff Bezos has committed $5.5 billion (roughly Rs. 36,800 crores) to the country and his local chief, Amit Agarwal, has made progress by adapting the site to local conditions.
After Losing China, Jeff Bezos Really Wants to Win in India
Amazon has been gaining ground quickly on Flipkart and it tried to derail the Walmart transaction at the least in part because it will fortify the Indian rival. Walmart can aid Flipkart with deep pockets and decades of retailing expertise in skills from logistics to marketing. The US retailer has been attempting to win on the Indian company since at the least last year.
Last month, Walmart decided to cede control of its UK grocery chain, Asda, as part of a worldwide strategy to prioritise faster-growing markets over some older ones. Walmart is merging Asda with the British retailer J Sainsbury and will retain a 42 percent stake in the combined company.
Within the Walmart deal, Flipkart’s existing shareholders Tencent Holdings, South Africa’s Naspers and Microsoft Corp. are expected to retain small stakes, the people said.
A $20 billion valuation for Flipkart would be substantially higher compared to $12 billion mark it hit last year. It is already the absolute most valuable startup in India.
SoftBank stands to make a tidy profit on a stake it took only last year. The Japanese company, through its Vision Fund, invested $2.5 billion (roughly Rs. 16,700 crores) at the earlier valuation, people familiar said at the time. That stake could be worth a lot more than $4 billion (roughly Rs. 26,800 crores) at the Walmart deal’s valuation.