Walmart may soon buy more than 40% of Flipkart: Reports
What's the story
In a direct attack on Amazon, American retailer Walmart may soon buy more than 40% of India's e-commerce giant Flipkart. The talks are to begin from next week, Reuters reported on Friday. Flipkart is expected to be valued at over $12 billion, making this one of Walmart's biggest overseas deals, which will have it purchase Flipkart's both new and existing shares. Here's more.
Explained
What does this mean for Flipkart?
Walmart can readily give Flipkart the support it needs to successfully challenge Amazon, which has promised to invest a whopping $5 billion to aggressively expand its reach in the Indian market. Moreover, Walmart is an undisputed leader in grocery deliveries and low-cost apparel sectors. Flipkart can use its expertise to effectively beat competition, continue diversifying and maintain its dominance in India's e-commerce.
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Flipkart's other major investors
If the deal is sealed, Walmart will be the latest to join the long list of Flipkart's high-profile investors, which already includes software giant Microsoft Corp, online marketplace eBay Inc and American hedge fund Tiger Global Management.
Benefits
How will this help Walmart?
Buying 40% of Flipkart will give Walmart's presence in e-commerce a major boost, which the world's largest retailer needs to take on Amazon, that is increasingly foraying into offline markets. The deal will also help Walmart make a noticeable entry in India, Asia's third-largest economy, that it's been trying to penetrate for years now. Currently, Walmart has just 21 'cash-and-carry' wholesale stores in India.
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Another attempt by Walmart to push its digital presence
The deal would be one among Walmart's several attempts to disrupt the e-commerce space in a major way. It comes closely after Arkansas-based Walmart bought online retailer Jet.com and announced a tie-up with Japan's Rakuten Inc for online grocery deliveries.