U.S.-based Walmart has signed definitive agreements to acquire a majority stake in Flipkart Group, India’s largest online retailer, for around US$16 billion.
The deal, which is Walmart’s biggest ever, comes days after the company agreed to sell its U.K.-based subsidiary, Asda, to rival supermarket chain, Sainsbury’s.
The world’s largest retailer will acquire a 77% stake in Flipkart, while the remaining shares will be held by some of the company’s existing shareholders, including Flipkart co-founder Binny Bansal and Microsoft Corp.
Walmart said the investment would help accelerate Flipkart’s mission to transform commerce through technology in India, one of the world’s largest and fastest-growing economies.
“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 Walmart president and CEO Doug McMillon.
“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.”
He added that the investment would benefit India by “providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.”
Bansal said the investment is of “immense importance for India” and will help fuel its “ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India.”
“While eCommerce is still a relatively small part of retail in India, we see great potential to grow,” he said.
“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.”
Walmart said it expects e-commerce to grow at four times the rate of overall retail in India. In the fiscal year ended March 31, Flipkart recorded net sales of US$4.6 billion, representing more than 50% year-over-year growth.
It added that both companies would maintain their brands and operating structures.
Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India, with more than 95% of sourcing coming from India. Krish Iyer, president and chief executive officer of Walmart India, will continue to lead that part of the business.