It’s official. The world’s biggest e-commerce deal has been signed. American retail giant Walmart Inc. will pay US$16 billion for a 77% stake in India’s largest start-up Flipkart.
Valuing the firm at about US$21 billion, the deal which takes Walmart’s battle with rival Amazon to another level, was made public on May 9.
The buyout, said to be the biggest e-commerce acquisition globally, marks the end of an era. Flipkart co-founder and chairman Sachin Bansal – who scripted the biggest start-up success story – will leave the company.
Initially they sold books then branched out to retail music, movies, games, electronics and mobiles.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” Walmart chief executive officer Doug McMillon said in a statement.
Amazon eventually wants Flipkart to become a publicly-listed subsidiary. The retailer said it expects India’s e-commerce market to grow at four times the rate of the overall retail industry.
Over a 100 million Indians have signed up on Flipkart. With a population of 1.3 billion, India is seeing rapid growth in its digital economy with the emergence of e-commerce start-ups
When the Bansals started out the going was not as smooth as internet penetration was low and a flourishing e-commerce business was still a distant dream.
Indian e-commerce industry has since grown steadily – US$30 billion in size – and analysts expect this to shoot up to US$200 billion by 2026.
However, the biggest Merger and Acquisition in the country – Asia’s third-largest economy – is the yet-to-be-completed merger of Vodafone India and Idea Cellular to create India’s largest telecom operator, surpassing Bharti Airtel. That deal, at US$23 billion, PTI reported.