Flipkart said to OK Walmart deal
If deal closes, it will seal a Walmart triumph over Amazon.com.
The board of Flipkart Online Services has approved an agreement to sell about 75 percent of the company to a Walmart-led group for approximately $15 billion, according to people familiar with the matter, an enormous bet by the American retailer on international expansion.
Under the proposed deal, SoftBank Group will sell all of the 20-plus percent stake it holds in Flipkart through an investment fund at a valuation of roughly $20 billion, said the people, asking not to be named because the matter is private. Google-parent Alphabet Inc. is likely to participate in the investment with Walmart, said one of the people. A final close is expected within 10 days, though terms could still change and a deal isn’t certain, they said.
That would seal a Walmart triumph over Amazon.com, which has been trying to take control of Flipkart with a competing offer. 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 and its primary competitor. Amazon is out of the running unless Walmart hits unforeseen trouble.
If completed, the deal will give Bentonville, Arkansas-based Walmart a leading position in the growing market of 1.3 billion people and a chance to rebuild its reputation online.
The world’s largest retailer has struggled against Amazon as consumers increase their spending on the internet. India is the next big potential prize after the U.S. and China.
“Flipkart is key to a global e-commerce strategy,” said Arvind Singhal, chairman of the New Delhi-based retail consultancy Technopak Advisors. “Walmart clearly doesn’t want to be left behind in the race as India is a critical piece.”
SoftBank declined to comment. Flipkart, Walmart and Google didn’t immediately respond to requests for comment.
Amazon has already been aggressively expanding in the country on its own. Founder Jeff Bezos has committed $5.5 billion to the country and his local chief, Amit Agarwal, has made progress by adapting the site to local conditions.
Amazon has been gaining ground quickly on Flipkart and tried to derail the Walmart transaction at least in part because it will fortify the Indian rival. Walmart can aid Flipkart with deep pockets and decades of retailing expertise in skills from logistics to marketing.