Flipkart to finalise sale of controlling stake in company to Walmart: Report

By Digit NewsDesk | Published on 05 May 2018
  • It was long rumoured that Walmart would be entering the e-commerce space through an investment in Flipkart, but it appears that the deal may be far bigger, and only days away from being final

Flipkart to finalise sale of controlling stake in company to Walmart: Report

The Indian e-commerce ecosystem got a major boost in credibility and usage once Flipkart entered the game in 2007. Since then the company has seen a meteoric rise, dwarfing other home-grown e-commerce players such as Snapdeal. Currently, the company is only rivalled by Amazon, a behemoth of an organization when compared to Flipkart. However, over the last year, the company had been rumoured to be in talks to sell portions of it in order to keep abreast with the competition. After acquiring Myntra, Jabong and even eBay India, it now appears that Flipkart may be ready to sell a controlling stake in the company to a US-based retailer, Walmart.

According to a report by Reurters, Flipkart’s board is yet to finalize a deal to sell a stake of about 75 percent in the company to Walmart for about $15 billion. A third source told Reuters that while Flipkart’s board had “in-principle” approved engaging with Walmart based on the terms of an offer before them, taxation related concerns and a few other issues need to be resolved. Reurters also reports that Alphabet, the parent company of Google might also be looking to invest in Flipkart.

While Walmart’s role in Flipkart’s future had been privy to many stories, Alphabet’s involvement comes up as an interesting corollary. Google recently launched the Google Home in India and has received some criticism over the lack of partner-service integration in comparison to Amazon Echo. The Echo devices, for one, have access to Amazon’s inventory of goods, allowing users to order products directly from the smart speaker. Google Home lacks this advantage, but a partnership with Flipkart would level the playing field, making Alphabet investing in Flipkart at this point in time a logical move.

Interestingly, Amazon too has formally submitted an offer to acquire 60 percent controlling stake in Flipkart, along with offering a $2 billion breakup fee as a means of convincing Flipkart to discuss the offer. However, given that Amazon is Flipkart’s biggest rival in India, a deal is unlikely due to anti-trust issues that would be raised by the Competitions Commission of India.

For now, it appears that Flipkart is likely to go ahead with the Walmart proposal, but when it comes to deals of such magnitude, things can change even at the very last minute. If Reuter’s reports are accurate, an announcement is likely to be made in a few days.

Digit NewsDesk

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