WALMART FLIP(S), TO PAY BN FOR KART

Biggest ever deal in e-commerce; retail giant eyeing vantage position in a market that will be worth $ 200 billion in a decade

The biggest ever deal in the e-commerce world has been clinched. Walmart has acquired a controlling 77 per cent stake in Flipkart for a whopping $16 billion. The deal will help the US retail giant — which has seen consumers migrate to online platforms like those run by Amazon — get a vantage position in a market that is expected to be worth $ 200 billion in a decade.

Flipkart commands a 40 per cent share of the online retail market, ahead of Amazon. The company also has 100 million registered users and sells 8 million products across 80-plus categories.

Walmart's investment includes USD 2 billion of new equity funding, which will help Flipkart accelerate its growth. Discussions are on with Google parent Alphabet Inc, which is keen to be a potential investor.

Flipkart co-founder Binny Bansal will continue to have a toehold with 5 per cent stake but co-founder Sachin Bansal will be formally exiting the company.

Japan's SoftBank is also making its exit by selling its entire 20 per cent stake. Sachin and Binny, who are not related and formerly worked for Amazon.com, began by selling books when they founded Flipkart.

More important, Flipkart will retain its distinctive brand: at least this is the indication that Walmart is giving. Walmart is not new to the business; rather, it is the world's biggest retailer in terms of revenue. But it has been largely restricted to 'cash-and-carry' wholesale business. Acquiring a stake in Flipkart will help Walmart dip into the India's retail market without building stores.

Walmart's Krish Iyer will be the CEO of the company which will continue to be based out of Bengaluru. The deal is subject to clearance from the Competition Commission and other regulators. It is expected to close later this year.

India's e-commerce market is tipped to grow to $200 billion in a decade, according to global financial services company Morgan Stanley, as cheap mobile data makes online shopping increasingly accessible.

Amazon was also said to have put in an aggressive offer to buy 60 per cent of Flipkart but the board of the Indian firm is said to have favoured the Walmart offer.

Launched in 2007 and envisioned as the 'Amazon of India' before the latter came to India, Flipkart owns country's largest online fashion retailers — Myntra and Jabong — both of which it had acquired.

Ajay Srinivasan, director, CRISIL Research, said, "With Walmart acquiring stake in Flipkart, we expect enhanced thrust on the online grocery segment. We expect online grocery to be the fastest growing segment in the e-retail space, growing at a 65-70 per cent to touch Rs.100 billion in revenues by fiscal 2020."