There has been months of speculation that Walmart was preparing to buy Flipkart but both have repeatedly declined to comment on the talks.
Flipkart's co-founder Sachin Bansal will make a complete exit from the company, while Binny Bansal will continue to work as Group CEO. Walmart in 2016 bought jet.com for $3.3 billion to kick start its USA e-commerce in its biggest market by far. But strangely, Walmart is using the e-commerce route to circumvent the rules to attack Indian market.
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The Arkansas-based firm, however, said its statement, "Walmart's investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future". It also says this money may be used to pursue other growth opportunities if and when they arise. "The sale of ASDA in the United Kingdom also meant that Walmart needed to identify a new growth avenue - and long frustrated by the byzantine laws governing foreign investment in Indian retail, growing via bricks and mortar retail would have been too complex and slow". Flipkart registered 20 shipments in the year of its debut. The country's e-commerce market is expected to experience explosive growth in the coming decades, so any retailer should see it as a covetable prize. "We initially invested in Flipkart in August 2012, and we're proud to have been part of the journey to build the leading e-commerce player in India". On one side, this war could shrink the marketplace for small vendors, while, on the other side, this war between Flipkart and Amazon could lead to a vast supply chain and generate a large number of jobs. It seemingly slowed down slightly from some furious deal-making in 2015, when it invested $1 billion across more than 50 companies and a year later reported negative returns.
U.S. retail giant acquires stake at $21 billion valuation; Sachin Bansal exits.
"We now have 21 stores and plan to open 50 stores in 4 to 5 years". Walmart's local business runs 21 Best Price cash-and-carry stores and a fulfilment centre that supports 19 cities across nine Indian states. Maintaining a distance with the visitors from Bentonville is seen as the best bet given that opponents can do little to block a clearance since Walmart only needs to inform the Reserve Bank of India about the transaction apart from obtaining approval from the Competition Commission of India, which vets deals above a certain threshold. In the statement, Walmart revealed intentions to retain Flipkart's goal to become a publicly listed majority-owned subsidiary. American hedge fund Tiger Global joined the investor bandwagon by infusing $10 million.