On the heels of Amazon's counterbid for Indian e-commerce company Flipkart, Walmart has received clearance from Flipkart's board to acquire roughly three-quarters of the retailer for approximately $15 billion, Bloomberg has reported, citing people familiar with the matter. Flipkart’s board ultimately decided a deal with Walmart is more likely to win regulatory approval because Amazon is the No. 2 e-commerce operator in India behind Flipkart.
In the proposed deal, SoftBank Group Corp. has agreed to sell all of its stake, over 20%, through an investment fund at a valuation of about $20 billion, the news outlet reported. Google-parent Alphabet Inc. is likely to participate in Walmart’s investment, too. Close of the deal is expected in 10 days.
Flipkart reportedly controls 40% of India’s online retail and is seeking to enter the grocery market, according to CNBC. Amazon made its formal counteroffer to Walmart’s for 60%of the e-commerce company earlier this week.
Walmart India owns and operates just 21 Best Price Modern Wholesale stores in 8 states across India, despite entering the market in 2009.
According to Forbes, Walmart has been looking to break into India for more than 15 years. Back in 2007, Walmart was briefly involved in a joint venture with Indian conglomerate Bharti, but that was for a wholesale model only and the relationship was short-lived. The country's foreign direct investment rules made it almost impossible for the American giant to enter as a retail chain, explained Satish Meena, senior forecast analyst at Forrester.