The retail giant plans to buy about a third of Flipkart Online Services, in part by purchasing stakes from Tiger Global Management and SoftBank Group.
The talks are at a critical stage and may wrap up this month. It’s also possible specifics such as the valuation or stake size may still change, and the deal may not come to fruition.
The deal may push the valuation of the homegrown startup to about USD 20 billion, up from about USD 12 billion in 2017.
If completed, the deal would give Walmart a major stake in an emerging ecommerce market of 1.3 billion people. The US company is the world’s largest retailer, but it has struggled against Amazon as consumers increasingly migrate to online commerce.
India is the next big potential prize after the US and China, where foreign retailers have made little progress against Alibaba Group.
Walmart and Flipkart declined to comment. W0almart is still working through the negotiations of its stock purchase. SoftBank, which has made more than USD 100 billion off of its investment in Alibaba, wants to retain a substantial stake in Flipkart and avoid giving up too much of its existing shares.
Tiger Global would like to hold onto at least a small Flipkart stake after Walmart comes in. Flipkart could also issue new shares as Walmart takes its stake. Tiger and SoftBank are currently the startup’s largest shareholders, followed by South Africa’s Naspers. That could add up to a formidable anti-Amazon alliance as SoftBank is also close to finalising an investment in Alibaba-backed Paytm E-Commerce, the third key player in India’s online retail market.
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