Walmart on Wednesday confirmed several months' worth of recent rumors regarding its Flipkart acquisition, having disclosed it reached a deal to acquire a 77-percent stake in India's e-commerce giant for approximately $16 billion. The takeover, subject to regulatory approval, will provide Walmart with a massive footprint in one of the world's fastest-growing online shopping markets and will allow it to take on Amazon in yet another country, in addition to providing Flipkart with more resources that will maintain its competitiveness. The remaining 23-percent stake in the company will still be held by Microsoft, Tencent, Tiger Global Management, and Flipkart's co-founder Binny Bansal following the purchase.
The move will see Japanese tech giant SoftBank exit its investment less than a year after taking a 25-percent stake in Flipkart for some $2.5 billion, with the company hence more than doubling its money's worth after committing to the e-commerce firm last August. Walmart claims its Flipkart tie-up will create more jobs, improve customer experience, and support "small businesses, farmers, and women entrepreneurs." Flipkart's plans to go public will remain unchanged after the purchase, with Walmart stating it's fully supportive of its ambition to eventually file for an initial public offering and continue operating as its majority-owned subsidiary, though it's still unclear when the company may push for such a move.
Amazon is also said to have been interested in acquiring Flipkart, having reportedly launched a bid to acquire a controlling 60-percent stake in the firm earlier this month. The offer is said to have been rejected due to major antitrust concerns it raised as Flipkart was unconvinced local regulators would approve a merger of two companies that hold the vast majority of India's e-commerce market, even as Amazon was supposedly willing to guarantee a $2 billion breakup fee. It's presently unclear whether the Seattle-based online retailer had any actual hopes of its bid being accepted or if it only wanted to drive up Flipkart's price for Walmart. The latter is what likely ended up happening regardless, with initial reports on the matter suggesting Walmart would have only paid in the ballpark of $14 billion for Flipkart before Amazon started showing interest in the Bengaluru-based company.