World’s Largest e-commerce Deal Sealed as Walmart acquires Flipkart for $16 bn


It’s official. Walmart has wrapped up Flipkart acquisition for $16 billion, a valuation of over $20 billion, which makes it the world’s biggest e-commerce deal. Walmart will own around 77% of the Bengaluru-based company in what is also being seen as the largest buyout for the US firm.

The deal, which will see founder Sachin Bansal exit completely, will now pit US-based giants Walmart and Amazon in the Indian market. The deal is going to shake things up. The world’s biggest retail deal will impact the whole segment, the competitors and the consumers. Here’s how it pans out.

News of the deal, which is still subject to regulatory approval, was let slip earlier Wednesday by SoftBank(SFTBF) CEO Masayoshi Son during an earnings presentation. The Japanese technology group invested $2.5 billion in Bangalore-based Flipkart last year. Son said the sale to Walmart valued SoftBank’s stake at $4 billion — implying a bumper return of 60%.

Many of Flipkart’s other investors will retain stakes in the company, including co-founder Binny Bansal, Chinese tech giant Tencent (TCEHY) and Microsoft(MSFT).

This is also the largest buyout for the US company with its biggest bet ever in online space and on India, underscoring the growing digital consumption potential in a country of 1.3 billion.

The Wednesday announcement culminates discussions between Walmart and the Bengaluru company that began in September 2016 with Walmart’s plans to pick a minority stake in Flipkart. The talks pivoted earlier this year towards the world’s largest retailer acquiring Flipkart.

ET was first to report on the talks between Walmart and Flipkart on 27 September, 2016.

The deal, which will see founder Sachin Bansal exit completely, will now pit US-based giants Walmart and Amazon in the Indian market, which experts say will help in growing the share of online retail in the country.

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer in a statement .

McMillon added that the company is also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. “We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”

“This investment is of immense  importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India,” said Binny Bansal, Flipkart’s co-founder and group chief executive officer.

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