Flipkart was already struggling to keep pace with the huge investments that Amazon was able to infuse into its India operations. The company recently offloaded its United Kingdom supermarket business to Sainsbury's for $4.1 billion and a 42% stake in the combined company.
Flipkart, founded in 2007, was the leader in India's small but fast-growing e-commerce market for a half-dozen years. Walmart chief executive Doug McMillon is reportedly flying to Flipkart's headquarters in Bengaluru this week to announce final closing of the deal.
As per the Bloomberg report, Son stated this during an earnings briefing which is a done deal and that its stake will be worth of the $4 billion post the deal. Sachin Bansal will sell his entire stake to Walmart while Binny Bansal will sell part of his to the American retailer, The Economic Times reported on Tuesday.
The head of Japanese technology company SoftBank Group Corp. said it had reached a deal to sell its Flipkart stake to Walmart. Year-to-date, WMT has declined -16.20%, versus a 0.79% rise in the benchmark S&P 500 index during the same period. "This is the best place to be anywhere in the world", McMillon, who is also Walmart president, said.
The world's wealthiest family has just bestowed billionaire status on two of India's most feted tech entrepreneurs. With Microsoft already being an investor in Flipkart, Alphabet is expected to invest almost $2 billion in the deal in an effort to fight Amazon across the globe. Binny Bansal will also take over as the new Executive Chairman and Group CEO at Flipkart which means that he'll also head Myntra, Jabong and PhonePe.
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Flipkart also focused early on mobile phones, and in 2016 became the first app in India to reach 50 million users.
Its investment will include $2bn (£1.5bn) of new equity funding and the company said it remains in talks with other potential investors to join the funding round but plans to continue to retain majority control of Flipkart. Walmart will pay approximately $16 billion for an initial stake purchase of 77% in Flipkart, formally known as Flipkart Private Limited. Foreign investment regulations have thus far prevented the Arkansas-based retailer from opening stores in India, restricting it to operating 21 wholesale distribution outlets.
The deal, capping nearly two years of on and off talks, will help the Bentonville, Arkansas-based retailer fortify and boost market share against Amazon.com, which also expressed interest in making a competing offer for a stake. "With Amazon closing the gap in categories other than fashion, Flipkart needs Walmart to remain competitive in the long term".
The intense competition between Alibaba, Walmart and Amazon is expected to bring added benefits to customers as each of them will try to lure people to their platform.