Walmart Inc. will take control of India’s largest e-commerce company Flipkart Ltd. in its biggest acquisition, joining the three-way fight for online supremacy in the country.
SoftBank’s 20 percent stake in India’s largest e-retailer is worth about $4 billion in the deal, Chief Executive Officer Masayoshi Son said in an earnings webcast. The Japanese company had earlier bought this stake, through its Vision Fund, for $2.5 billion, he said.
Son didn’t elaborate on other terms of the Walmart takeover.
The deal will fortify Flipkart’s war chest as the fierce competition has already wiped out about half of the $6.1 billion it has raised from investors since inception. The opportunity is huge with Alibaba Group-backed Paytm also in the race. Online sales account for less than a tenth of the $672-billion retail share in world’s second-most populous nation. But it’s among the fastest growing e-commerce markets, driven by rising smartphone sales and cheaper data.
The acquisition also brings the world’s biggest retail battle to India as Amazon.com Inc is already challenging Walmart while the Seattle-based online retailer lost out to Jack Ma’s Alibaba Group in China. So, India is the next big potential market for both. Amazon’s founder Jeff Bezos has already committed $5.5 billion investments.
Walmart’s has had a tough run in Asia’s third-largest economy. India hasn’t opened multi-brand retail to foreign companies and the Bentonville, Arkansas-based giant set up a joint venture with Bharti Enterprises Ltd. for cash-and-carry wholesale stores. Bharti pulled out of the joint venture after six years following an internal anti-corruption probe.
Walmart had been on acquisition spree to build up its online play. It made a big splash in 2016 by buying Jet.com for $3.3 billion. It has since acquired two other online retailers, Bonobos and ShoeBuy, as well as Parcel Inc., an e-commerce logistics provider.
The deal with Flipkart is Walmart’s biggest acquisition, after its $10.8 billion purchase in 1999 of British retail chain Asda which it has now agreed to sell to British supermarket chain Sainsbury’s.
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