Softbank CEO Masayoshi Son confirmed that Walmart is buying a majority stake of Flipkart. US retail Walmart owns 20 percent stake in the India’s largest e-commerce company Flipkart. It is the biggest deal in the e-commerce space, Softbank is Flipkart largest investor.
Softbank CEO said that:
“Last night, (they) reached a final agreement and it was decided that Flipkart will be sold to America’s Walmart,”
Softbank’s 20 percent stake in Flipkart is worth about $4 billion in the deal, Son said that in an earnings webcast. Son had bought this stake for $2.5 billion. He also confirmed that Softbank’s investment in the Indian online marketplace had almost doubled.
A spokesperson of All India Online Vendors said that:
“These products would be brought in at hyper-competitive prices, which will cannibalise the market and make it difficult for other sellers to operate. We are studying the situation and will take appropriate action, including the legal route, if necessary,”
From many years Walmart tried to enter India but has remained confined to a ‘cash-and-carry’ wholesale business amid tough restrictions on foreign investment. It currently operates 21 such stories in India. Walmart purchase in $12 billion of the Flipkart 72 to 73 stakes approximately.
The battle between Amazon and Flipkart for leadership in the Indian market will grow more intense with Walmart buying into Flipkart. Amazon has committed investments to the tune of $5billion for its operation in India. Amazon CFO Brian Olsavsky said the company would continue to invest in India as it saw great progress with both sellers and customers here.
According to the sources Walmart is likely to buy stakes of multiple Flipkart investors, including that of Tiger Global Management and Softbank to end up with a significant majority holding. Tiger Global and Masayoshi Son-led Softbank hold about 20 percent stake each in the Singapore holding company of Flipkart.