Washington: US retail giant Walmart Inc will pick up a 77% stake in India’s largest online retailer Flipkart for $16 billion, successfully concluding more than 20 months of talks, in what will be the country’s largest acquisition and the world’s biggest purchase of an e-commerce company. It will include $2 billion of fresh investment as Walmart looks to take on rival Amazon’s global expansion, pegging the value of Flipkart at $22 billion.
The transaction will result in the largest exit for private equity and venture capital investors in India — they’re expected to collectively make about $14 billion by selling shares to Walmart. The transaction puts it ahead of the $14.6-billion Bharti-Indus Towers merger and the $12.9-billion Essar Oil-Rosneft transaction. Only the Vodafone-Idea merger was valued higher at $23 billion. Flipkart cofounder Sachin Bansal exits while the other cofounder Binny Bansal remains invested.
The early US market response didn’t seem too positive with Walmart dropping 4% as it lost $10 billion in market capitalisation to $242 billion. Amazon was up marginally by 0.3%, putting its market capitalisation at $779 billion. Walmart plans to use Flipkart’s expertise to expand globally and assured employees that its startup ethos will be nurtured and strengthened. “We hope we learn from you how to build an ecosystem, more about innovation and payments — we will help with sourcing, supply chain expertise,” Walmart chief executive Doug McMillon told Flipkart employees.