However, completion of due diligence in no way confirms the finalization of the deal.

Walmart completes due diligence to buy controlling stake in Flipkart
Atom M&A Saturday, April 07, 2018 - 10:24

Walmart’s entry into the Indian ecommerce space seems to be closer to reality as the retail giant has completed the due diligence process on e-commerce firm Flipkart this week. As reported earlier, Walmart is looking to pick up a controlling stake of 51% in Flipkart.

According to a Reuters report, the US retail giant has floated a shareholder agreement. It will reportedly shell out anywhere between $10 billion to $12 billion for a stake that is likely to value Flipkart at around $20 billion.

If Walmart offers a good price, Flipkart’s newest investor SoftBank may also sell a part of its 20% stake in the ecommerce major. Its other investors such as Tiger Global Management, Accel Partners and Naspers are likely to sell their entire stakes in Flipkart to Walmart.

SoftBank committed an investment of $1.4 billion in Flipkart as part of the ecommerce’s major’s $2 billion funding round.

However, completion of due diligence in no way confirms the finalization of the deal. The talks are still on going.

Walmart is eyeing a majority stake in Flipkart to take on Amazon, which is its global rival. Flipkart is currently backed by SoftBank Group Corp., Tiger Global Management, eBay, Accel Partners, Naspers, Tencent Holdings and Microsoft Corp and others.

An infusion of funds from Flipkart will be a great boost to Flipkart in its ongoing war against rival Amazon. In addition, having an ally such as Walmart with prior experience in retailing, logistics and supply chain management, will be an advantage for Flipkart, reports Reuters.

The report further states that Walmart could also help Flipkart in going its private label business and in return open up a large market for Walmart.

Interestingly, the third rival in this space, Paytm Mall also got recently raised $450 million (Rs 2,900 crore) from Softbank Group and its existing investor Alibaba Group.

While Walmart is pursuing talks with Flipkart, Mint reported earlier this week that Amazon too is considering placing a rival bid to acquire a controlling stake or buy out Flipkart. However, the report quotes sources as saying that Walmart is a more likely investor that Amazon.

If a deal with Amazon goes through, t could create the country’s largest ecommerce company, which would be hard to beat and severely affect rivals such as Paytm Mall, Shopclues and Snapdeal.

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