Business & Finance

Walmart To Take Control Of Flipkart, SoftBank CEO Confirms

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 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 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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