Walmart, aiming to boost its presence in India, is in talks to morph into Flipkart — it wants to become the Indian online retailer's biggest shareholder by spending $7 billion to purchase stock.
Citing people familiar with the matter, Bloomberg reported that Walmart is aiming to acquire around one-third of Flipkart Online Service, partly via stake purchases from Tiger Global Management and SoftBank. According to Bloomberg, the investment could drive Flipkart’s value to around $20 billion. That’s up from a roughly $12 billion valuation in 2017.
The talks could be completed in March, although specifics of the investment or the stake size may change. If it does go through, it would give Walmart a majority stake in a market where eCommerce is just starting to take off and is home to 1.3 billion people. After the U.S. market, India and China are seen as the next big opportunities for the likes of Walmart and Amazon. Both have had little success against Alibaba, China's leading eCommerce player. For Flipkart, the backing from Walmart would help it push back from Amazon, which has vowed to invest $5.5 billion in India, noted Bloomberg. Amazon has said it will do what it takes to become a leader in the Indian market.
People familiar with the matter noted that Walmart is currently in negotiations with SoftBank, which still wants to maintain a good-sized stake in Flipkart and doesn't want to give up too much of what it currently owns in the company. Meanwhile, Tiger Global wants to have at least a small stake in Flipkart once the Walmart deal is complete. Flipkart could opt to issue more shares if Walmart gets the big stake, noted the report. Tiger and SoftBank are Flipkart's biggest shareholders. With SoftBank remaining an investor in Flipkart and it nearing a deal to invest in Paytm eCommerce, the Alibaba-backed venture and the third largest online retailer in India, it could result in an anti-Amazon alliance that is powerful enough to actually take on the eCommerce giant in the country.