Mumbai: E-commerce firm Flipkart's board has approved a deal to sell an equity stake of about 75 percent in the company to a group led by Walmart Inc for about $15 billion, Bloomberg reported on Friday, citing unnamed sources. A final agreement is expected within 10 days, the sources said, but they warned that the deal is not certain.
Walmart also has plans to incorporate blockchain tech into its supply chain in India through Flipkart - very similar to the system it has in place in China through its partnership with JD.com (the country's second-largest retailer, after Alibaba), IBM and Tsinghua University National Engineering Laboratory for E-Commerce Technologies in the Blockchain Food Safety Alliance.
In an interview with Reuters on Tuesday, McKenna downplayed analyst criticism that the company has been slow to move in India. Assuming the deal goes through on Walmart's end, it's a huge victory for the company that gives it a big leg up in a burgeoning market. "The combined business will have enhanced capabilities and a strong balance sheet to help deliver value and opportunities for customers, colleagues, suppliers, and shareholders of both businesses", the release concluded.
While Walmart is already in talks with Flipkart to take the deal forward, there is no denying the fact that Amazon still remains as competition to its Indian counterpart.
The buzz is that Walmart will acquire more than 70 per cent in Flipkart through a mix of cash and stock and that SoftBank, which holds around 24 per cent in the e-tailer, will exit completely.
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If finished, the deal will offer Bentonville, Arkansas-based Walmart a foremost position in the growing market of 1.3 billion people and a chance to remake its reputation online.
"Flipkart is key to a global e-commerce strategy", Arvind Singhal, chairman of Technopak Advisors, an Indian retail advisory firm, told Bloomberg. Flipkart, Walmart and Google didn't immediately respond to requests for comment.
Amazon has been gaining ground quickly on Flipkart and it tried to derail the Walmart transaction at least in part because it will fortify the Indian rival. If Walmart can clear a few more hurdles to get the deal done, the company could soon be a prominent player in India's exploding retail market.
Google-parent Alphabet Inc.is expected to participate in the investment with Walmart, said one of the sources.
Investors, including Shekhar Kirani, Deep Nishar, and IDG Ventures, as also several pension funds are reported to have exited Flipkart through the buyback at $169.31 per share, which pegs Flipkart's valuation at around $17.7 billion.