In India, the new battle ground between Walmart and Amazon.com, the largest retailer in the world apparent seems to have trumped to its online rival Amazon and is slated to take up a majority stake at Flipkart – India’s largest e-commerce company. Additionally, India is also amongst the fastest growing online markets in the world.
It is being reported that about 75 per cent of stake in Flipkart would be taken up by Walmart following months of negotiations.
It has been reported that the possible deal, worth roughly $15 billion, has been passed by the board of Flipkart Online Services Pvt. About $20 billion is the total sale value of the Indian e-commerce market leader.
An investment bank would be used sell all of its stake by Flipkart’s largest shareholder, SoftBank, as a part of the deal. Over 20 per cent stake is owned by SoftBank in Flipkart. It has also been reported that a minority stake in India’s largest online marketplace is being sought ot be taken up by Google’s parent Alphabet which is reportedly in talks with Bentonville, Arkansas-based retail major.
Anywhere between $1-2 billion is expected to be invested by the tech giant according to reports. There is a partnership between Alphabet and Walmart since last year in the US. The online shopping mall of Google – Google Express, is used by Walmart to sell its products online in the U.S. Google Assistant on Google Home is also used by Google to sell Walmart products.
Many analysts view the joining of forces by the two biggest corporations in the World as a signal to put up a strong fight against Amazon’s expanding business and its dominating position in global retail business.
Amazon has bene eating in to the market share of Walmart in the U.S. and hence its acquisition of Flipkart is expected to challange the dominance of Amazon in global retailing business. and the ambitions of Walmart on its online business will also receive a boost by the deal especially in a huge market like India.
There have also been reports in India that if the deal goes through, Flipkart’s Executive Chairman Sachin Bansal may quit. He is the co-founder of the company and managed the company for over a decade now. And because proposed deal has pegged a valuation of about $20 billion for Flipkart, it is expected that over $1 billion would be taken home by Bansal against the about 5.5 per cent stake that he holds in the Indian e-commerce bellwether.
He co-founded Flipkart in 2007 with his college mate Binny Bansal as an online books seller in Bengaluru where the company is still headquartered.
In case a deal is reached, share their respective shares are likely to be sold by the early investors of Flipkart such as New York-based Tiger Global, Accel and South African internet conglomerate Naspers.
(Adapted from BusinessToday.com)