Walmart has decided to buy a business, a majority stake in the Indian e-commerce giant Flipkart for 16 billion dollars.
The US retail giant, said on Wednesday that it would receive an initial stake of around 77 per cent in Flipkart. The Rest of the company is held by the existing investors, including Flipkart co-founder Binny Bansal, Tencent, Tiger Global and Microsoft.
Wal-Mart said in a statement that the long-term objective would be the support Flipkart the transition into a publicly traded subsidiary. The dealer said it is expected that India’s e-commerce market is growing four times faster than overall retail.
Walmart said President and chief executive, Doug McMillon, investing in Flipkart was part of the company’s goal to invest in India’s fast-growing economy.
“India is one of the most attractive retail markets in the world, given the size and rate of growth, and our investment is an opportunity for partners and the company leading the transformation of e-commerce in the market,” McMillon said in a statement.
Walmart announces 77% share in India Flipkart
21 Hours Ago | 05:06
Walmart’s investment in Flipkart contains a $2-billion fresh equity financing. Wal-Mart said it will the use of a combination of newly issued debt and cash for the financing of the round. The two companies are in talks with other potential investors, the investments, the reduction Walmart game.
Both companies retain their brands and operating structures, Walmart said. A final closing of the deal is expected to be later this year.
Goods, the transaction said at the end of the second quarter of the fiscal year, Walmart, he would expect a hit on the full year 2019 earnings per share (EPS) of 25 cents to 30 cents.
The company reported a profit miss in February, signaling that the competitive pressure it faces from the likes of Amazon in the online trading.
Earlier Wednesday, SoftBank chief Masayoshi Son, Walmart said it had an agreement to take control of Flipkart.
SoftBank is currently one of the largest shareholders in Flipkart. According to some reports, the
Flipkart has registered 100 million users, the platform, according to the website of the company. India, which has a population of 1.3 billion, is to see that the rapid growth of the digital economy with the advent of e-commerce start-ups such as Snapdeal and Paytm.
The investment will see Walmart accept U.S. e-commerce company Amazon in one of the most important growth markets for the company. In 2016, Amazon CEO Jeff Bezos announced that his company would invest $3 billion in India. Amazon, allegedly for his own bid for a majority stake in Flipkart.
Walmart-deal with Flipkart follows a merger between the British supermarket brand Asda and rival Sainsbury’s, a tie-up presented a significant competitive disadvantage challenge in the UK food retailer Tesco is dominant.
Shares of Wal-Mart were up 3.5 percent in U.S. premarket trade on Wednesday after the announcement.