In what could cause a huge shakeup in India’s e-commerce sector, U.S. retail giant Walmart has reportedly completed all the due diligence to pick up controlling stake in Flipkart. Sources close to the matter claim that Walmart has already floated a shareholder agreement to pick up 51% stake in India’s homegrown e-commerce behemoth.
Sources further claim that the U.S. retail giant is likely to pay $10 to $12 billion and has valued Flipkart at nearly $20 billion. However, reports are also rife in the market that this high-profile deal is still far from getting finalized as many important nitty-gritties are yet to be sorted out.
If this deal does go through, it will most certainly result in change of ownership pattern in Flipkart. Sources are already hinting that existing investors Tiger Global Management, Accel Partners and Naspers may dilute their stake after sale out to Walmart. But there is no information as to what will happen to the stake of SoftBank, which is currently the largest stakeholder in Flipkart.
Both Flipkart and Softbank declined to comment on reports of Walmart buyout.
Will it now be Amazon vs Walmart?
Walmart’s controlling stake in Flipkart will pit two of the greatest U.S retail rivals in India’s burgeoning e-commerce market. No one would have imagined a scenario of Walmart vs Amazon a few months back but now such a scenario looks closer to reality.
Industry experts are certain that with Walmart on the board, Flipkart will surely make life difficult for Amazon. Currently, both companies are nick-to-nick in their desperate bid to seize the bigger pie of India’s e-commerce market.
But experts argue that India’s homegrown e-commerce major won’t just benefit from the huge funds that Walmart would bring along with it. But also U.S retail giant’s exhaustive experience in retailing, supply chain, cargo management and customer management will equally prove to be a huge boon for Flipkart.