Walmart agree a $16m deal to buy Indian online retailer Flipkart

Walmart agree a $16m deal to buy Indian online retailer Flipkart

American retail corporation Walmart has confirmed it has agreed a deal to buy the controlling stake India's largest online retailer, Flipkart Group, in a deal worth $16 billion.

In a statement, Walmart CEO Doug McMillon said that the lucrative Indian market was the driving force behind the purchase: "India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market."

As part of the deal, which has taken 19 months to complete, Walmart will receive an initial stake of 77 per cent, and have agreed to invest $2 billion in capital into the business. For now, the remaining portion of Flipkart will continue to be owned by existing investors including its co-founder Binny Bansal, as well as Tencent, Tiger Global and Microsoft.

 

Founded in 2007, Flipkart is seen as one of the companies at the forefront of India’s e-commerce revolution, having grown rapidly since its inception. Underpinned by technology, including artificial intelligence, they sell electronics, large appliances and phones, as well as fashion and apparel.

The payout is the first time than any of India's generation of internet entrepreneurs have seen their multi-million dollar valuations translate into cold, hard cash on such a scale. The purchase, which is also the largest acquisition in Walmart's history, is still subject to regulatory approval in India.

But while the deal appears to be further confirmation that India may be seen as the next big emerging market for internet retailers, the move has still been seen as a gamble by some. This is partly because although the Internet and Mobile Association of India estimates that there are approximately 481 million internet users in India, the number of individuals with enough disposable income to shop online is still relatively small.

This is compounded by the fact that Walmart will still face stiff competition from its rivals Amazon and Alibaba, who both have a presence in the country. Although Flipkart is currently the market leader, Amazon’s Indian site, which only launched in 2013, is catching up quickly.

The takeover of Flipkart wasn't Walmart's only big deal, however. On 30 April the company announced a multi-billion dollar merger of its British supermarket brand Asda with another supermarket, Sainsbury's. The deal, which is worth $10 billion, is designed to fight off competition from rivals Tesco, who are currently the market leaders in the UK, and from Amazon's recently launched “shop and go” food store, Amazon Go,