Walmart buys majority stake in Flipkart

Walmart has struck a deal to acquire 77 percent of Indian e-commerce leader Flipkart for $16bn, as Flipkart continues to battle Amazon for market dominance

Walmart President and CEO Doug McMillon (R) revealed the company had agreed to buy a majority stake in Flipkart on May 9, making the announcement alongside the Indian company's co-founder and CEO, Binny Bansal

On May 9, American retail giant Walmart announced it had acquired a majority stake in India’s Flipkart, bringing an end to a bidding war with Amazon. Walmart has revealed it will pay $16bn for a 77 percent stake in the Indian e-retailer.

Flipkart has been an attractive takeover target for some time due to its pioneering role in the growth of Indian e-commerce and its innovative practices, such as cash payments on delivery.

The company has grown remarkably since it was founded 11 years ago and now makes approximately half a million deliveries across more than 800 cities every day. In the last fiscal year, Flipkart recorded $4.6bn in sales – an increase of over 50 percent from the previous year.

Flipkart has been an attractive takeover target for some time due to its pioneering role in the growth of Indian e-commerce and its innovative practices

“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 [the] transformation of e-commerce in the market,” said Walmart President and CEO Doug McMillon in a statement.

“We are confident this group will provide Flipkart with [an] enhanced strategic and competitive advantage. Our investment will benefit India [by] providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”

India’s young and rapidly growing population makes it an important market for global retailers, and prospects for growth are multiplied by increasing internet access.

Flipkart and Amazon have been in fierce competition ever since Amazon entered the Indian market in 2013, and Walmart’s expertise is likely to give Flipkart a leg up in the battle. Other major investors, such as Tiger Global, Tencent and SoftBank, will all retain their shares in the company.

This is the second major international deal for Walmart in as many weeks, with the firm having sold its UK subsidiary, Asda, to Sainsbury’s on April 30.