INSUBCONTINENT EXCLUSIVE:
Flipkart co-founder Binny Bansal and other shareholders will hold the remainder
The tie-up values the Indian e-commerce giant at about $20.8 billion and marks a blow against rival Amazon.com Inc
market, which Morgan Stanley has estimated will grow to $200 billion in about a decade
But it will take some time for the business to turn profitable, and analysts on a Wednesday morning call about the deal adopted a cautious
in New York -- the lowest intraday price since October
Walmart tie-up, Flipkart gets additional capital and expertise to battle Amazon, which has spent billions of dollars to gain customers in
was upstaged earlier Wednesday when Masayoshi Son, chief executive officer of SoftBank Group Corp., confirmed during a briefing in Tokyo
that the United States retailer had agreed to buy control of Flipkart
SoftBank invested $2.5 billion in the Indian company and that stake will be worth about $4 billion in the deal, Son said.
Indian PlanFor the
Walmart once envisioned operating hundreds of locations across India but it has been unable to open traditional units because of
long-standing governmental rules for so-called multibrand international retailers
Walmart entered India in 2009 through a joint venture with Bharti Enterprises, and took full control of that business in 2013
lowered, though it will retain majority ownership
Flipkart will maintain a separate brand and operating structure, the companies said.
The deal is the largest-ever in e-commerce, according
to data compiled by Bloomberg.
The deal represents a missed opportunity for Amazon CEO Jeff Bezos, who has also failed to create a
meaningful presence in China
Amazon needs to succeed in another high-growth market to prove it can effectively replicate its model beyond North America, and it has been
aggressively expanding in India
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.
Despite its size and global clout, Walmart has found it necessary to forge alliances in its battle against Amazon, which last
year bought Whole Foods Market to gain a foothold in the United States grocery industry
India is the next big potential prize after the United States and China, where foreign retailers have made little progress against Alibaba
Walmart has tried to make a bigger push into apparel online with acquisitions like Bonobos and ModCloth, along with a partnership with
Last month, the company agreed to cede control of its U.K
grocery chain, Asda, merging it with British rival J Sainsbury Plc
Walmart will retain a 42 percent stake in that combined company.
Flipkart competes with Amazon across a range of product categories
with 27 percent.
The Indian company has attracted investment from a range of companies that also includes Microsoft Corp., Tencent Holdings
and Tiger Global Management, which will retain stakes.
