Looks like Flipkart may get some major push from U.S. retailer Wal-Mart Stores Inc. According to a report published in Economic Times newspaper, Walmart is in talks with Flipkart to acquire a minority stake in the company.
The report states that Walmart may acquire a stake of 15 percent to 20 percent in Flipkart, which rivals the e-commerce giant Amazon in India. Walmart has held sporadic talks with Flipkart over two years, an unnamed source intimate with the matter told Reuters. In fact, both the companies entered into a non-disclosure agreement in 2016 that was renewed last year.
Going by the reports that have surfaced in the past two years, Walmart is likely to make a major investment in Flipkart if the deal finalises. The sources cited in the reports are of a view that buying a stake in an e-commerce firm could be challenging. And this is not the first time when Flipkart may receive funding from outside, the company received nearly $2.5 billion investment from Japan’s SoftBank Group. Besides, Flipkart also obtained $1.4 billion from China’s Tencent, eBay, and Microsoft.
The report further states that Flipkart owes a fifth of its stake to SoftBank, while the US-based Tiger Global Management owns less than 20 percent stake in the company. Going by the report, we also wonder why would Walmart just take a small stake in Flipkart instead of fully acquiring it.
As for Walmart’s interest in Flipkart, if the deal materialises then the battle between Amazon and Walmart could intensify, as the former affected the business of brick-and-mortar stores in the US. It is not a hidden how Amazon pushed the physical store chains to invest in online retails and to offer better discounts to attract buyers to come to the store instead of buying products online.
Flipkart and Walmart both declined to say a word on the report, tagging it as a mere rumour.