Walmart to buy 77 per cent of Indian e-commerce giant Flipkart for US$16 billion

Walmart has agreed to buy a controlling stake in India’s biggest online retailer, striking a blow against rival Amazon.com as the battle for e-commerce supremacy goes global.

The world’s largest retailer will acquire a 77 per cent holding in Flipkart Group for US$16 billion, the companies said in a statement. Flipkart co-founder Binny Bansal and other shareholders will hold the remainder.

The deal – Walmart’s biggest ever – gives it greater access to India’s e-commerce market, which Morgan Stanley has estimated will grow to US$200 billion in about a decade. Flipkart, meanwhile, gets additional capital and expertise to battle Amazon, which has spent billions of dollars to gain customers in India.

Online sales in the world’s second most-populous nation are growing about 35 per cent a year, according to data tracker Euromonitor, fuelled by a rising middle class and urbanisation that present an attractive environment for e-commerce.

Walmart was upstaged earlier on Wednesday when Masayoshi Son, the chief executive of SoftBank Group Corp, confirmed during a briefing in Tokyo that the US retailer had agreed to buy control of Flipkart. SoftBank invested US$2.5 billion in the Indian company and that stake will be worth about US$4 billion in the deal, Son said.

For the US retailer, acquiring a stake in Flipkart enables it to tap into India’s retail market without building stores. 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.