Walmart rushes into India, paying $16B for stake in Flipkart
BENTONVILLE, Ark. (AP) — Walmart is breaking into India's massive and growing consumer market with its biggest acquisition yet, spending $16 billion for a controlling stake in the online retailer Flipkart, whose delivery drivers, with their motorcycles and oversized backpacks, have become ubiquitous across the nation of 1.3 billion people.
Retail sales are being fueled by a hot economy in India. The International Monetary Fund has projected that India's economy will grow 7.4 percent this year.
The acquisition surpasses Walmart's $10.8 billion deal to buy United Kingdom's Asda back in 1999 and makes its acquisition two years ago of online retailer Jet.com for $3 billion look paltry. It also reflects Walmart's focus on growth opportunities as it tries to narrow the gap between itself and Amazon.com.
Walmart is building fewer big stores and expanding its presence online.
Flipkart's supply chain arm, eKart, is established more than 800 cities and makes 500,000 deliveries daily.
Online sales in India have exploded in recent years, reaching $19.6 billion in 2017, according to a Forrester report. Those sales are expected to grow rapidly this year. Both Walmart and Amazon have pushed hard to catch up to Flipkart and to become the first major U.S. retailer to establish a substantial foothold in the country.
Walmart will own approximately 77 percent of Flipkart. The rest will held by some of its existing shareholders, including co-founder Binny Bansal, a former Amazon employee. Other stakeholders include Tencent Holdings, Tiger Global Management and Microsoft Corp.