FINANCE

Walmart completes $16 billion acquisition of India’s e-commerce giant

BY Marianne Wilson

Walmart has completed the largest acquisition in its history — and gained more firepower in its fight against Amazon.

The discounter has completed its $16 billion investment in Flipkart, making Walmart the largest shareholder in the company with a 77% share. Flipkart is the largest e-commerce player in India, where online sales are expected to exceed $73 billion by 2022. It is touted as a direct competitor to Amazon, which considers India one of its key global markets. The online giant was also reportedly looking to acquire the Indian company.

Walmart’s investment includes $2 billion of new equity funding to help accelerate the growth of the Flipkart business. Both companies will retain their own brands and operating structures in India. Moving forward, Flipkart’s financials will be reported as part of Walmart’s International business segment.

Flipkart’s existing management team will continue to lead the business. Tencent Holdings Limited and Tiger Global Management will remain represented on the Flipkart board, in addition to independent board members, and will be joined by new members from Walmart. The remainder of the business that is not owned by Walmart is held by other shareholders, including Flipkart co-founder and group CEO Binny Bansal, Tencent, Tiger Global and Microsoft Corp.

Founded in 2007, Flipkart has led India’s e-commerce revolution. Flipkart’s supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily.

“Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart,” said Judith McKenna, president and CEO of Walmart International. “Our investment will benefit India by providing quality, affordable goods for customers, while creating new skilled jobs and opportunities for suppliers. As a company, we are transforming globally to make life even easier for customers, and we are delighted to learn from, contribute to and work with Flipkart to grow in India, one of the fastest-growing and most attractive retail markets in world.”

The Flipkart investment enhances Walmart’s position in a country with more than 1.3 billion people, strong GDP growth, a growing middle class and significant runway for smartphone, Internet and e-commerce penetration. As Walmart scales in India, the company said it will continue to partner to create sustained economic growth across agriculture, food and retail.

“We are poised and ready to deliver the full value of this partnership for India,” said Bansal. “By combining Walmart’s omnichannel retail expertise, supply chain knowledge and financial strength with Flipkart’s talent, technology and local insights, we are confident that together we can drive the next wave of retail in India.”

Walmart first announced it would acquire Flipkart in May. It estimated the deal would have a negative impact of $0.25-$0.30 on earnings per share (EPS) for fiscal 2019.

A local trader body, the Confederation of All India Traders (CAIT), has opposed the Walmart-Flipkart deal from the start, saying it would create unfair competition and drive local convenience stores out of business. The group plans a protest across India on September 28.

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