Denis Opudo
Last week, Walmart sealed a deal with India’s Flipkart Company. This was in line with its international expansion strategy. According to the Flipkart officials, the company agreed to sell their stakes to Walmart at $15 billion. The deal also required SoftBank Group to sell more than 20% of its shares to Walmart. The bank had acquired the shares from Flipkart via investment fund. Walmart will pay the bank approximately $20 billion.
Google-parent Alphabet Inc showed interest to partner with the Walmart as well. The Terms of the partnership are yet to be concluded in ten days time from now. The acquisition will place Walmart ahead of Amazon. In India, Flipkart is the largest e-commerce followed by the Amazon. Walmart is the potential beneficiary of Flipkart shares’ deal. There are various advantages associated with the deal between Walmart and Flipkart. They include rebuilding online reputation and accessing 1.3 million customers Flipkart customers. Globally, US is the third largest online market followed by China than India.
According to the chairman of Technopak Advisors, Arvind Singhal, Flipkart is one of the best e-commerce platforms in the world. Walmart currently shifted its marketing strategy to tap opportunities in the Indian market. He added that Amazon Company is also carrying out its market expansion in India. Jeff Bezos, Amazon founder injected $5.5 billion into the India market. Mr Amit Agarwal, the Amazon local Chief helped in harnessing the local opportunities.
Walmart initiated the deal from last year but it is still facing threats from Amazon. The greatest fear of Amazon was that Walmart will finance their competitor. This will help Flipkart to outdo them in Indian market. Walmart merged with British retailer J Sainsbury Plc and Asda to form one company. The initiative was to enable the company keep forty-two percent share in the new company. When Walmart finalized the deal, Flipkart shareholders will cut-down their stakes. They comprise Naspers Ltd, Microsoft Corp, and Tencent Holdings Ltd.
The Flipkart is the highest valued company in India. It hits $20 billion valuations this year which is greater than $12 billion in the previous year. SoftBank made little profit from their $2.5billion stake investment in the Flipkart. The stake could have generated $4 billion in the Walmart new deal.
