The Bangalore-based e-commerce company is valued at $20.8 billion.
Ending all speculations about Flipkart acquisition, Walmart announced on Wednesday that it has acquired 77 percent stake in the Indian e-commerce giant, thus closing the door for rival Amazon’s conditional pitch for takeover.
The Bangalore-based e-commerce company, which started off as an online book seller, is currently valued at $20.8 billion.
The two founders, Sachin Bansal and Binny Bansal, chalked out the business plan for Flipkart after they quit their jobs at Amazon. Amazon had made a very late pitch to buy 60 percent stake with a condition that the founders sign a non-compete agreement.
With the deal with Walmart sealed, Flipkart co-founder Sachin Bansal will exit the company along with Softbank, which owned 20 percent stake in the company.
Flipkart, after a modest beginning in 2007, became India’s first billion-dollar e-commerce firm. It now sells close to 8 million products in 80 categories.
Other than Japan’s Softbank — which had earlier confirmed that its investment in Flipkart has almost doubled over the years — Tiger Global, Naspers and Accel own major shares of the company.
The two Bansals combined owns 10 percent stake.
In 2017, Kalyan Krishnamurthy, an executive with Tiger Global, was appointed as the CEO of Flipkart, and co-founder Binny Bansal was made CEO of the whole group.
The Flipkart group owns fashion portals Myntra-Jabong, payment system PhonePe and logistics firm Ekart.
As the reports about Flipkart-Walmart emerge, Amazon has announced that it will pump in $5 billion to its India operations. By acquiring majority stake in Flipkart, Walmart successfully tapped into the Indian retail market without building stores.
Walmart had entered India in 2007 as a joint venture with Bharti Group, but the two partners called it quits, in 2013.
Walmart is now seeing a steady growth in business in the country. It has 20 cash-and-carry (CC) stores in India and is expected to launch 50 more stores by 2021, with an overall investment of over $500 million.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer. “As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”
“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India,” said Binny Bansal, Flipkart’s co-founder and group chief executive officer. “While eCommerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and eCommerce to the fore.”
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“Flipkart has established itself as a prominent player with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart,” said Judith McKenna, president and chief executive officer of Walmart International. “This investment aligns with our strategy and our goal is to contribute to India’s success story, as we grow our business. Over the last 10 years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products. With Flipkart and the other shareholders who have come together, we will continue to advance the winning eCommerce ecosystem in India.”