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Could Walmart Acquire Majority Stake in India’s Flipkart?

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Walmart could become Flipkart’s largest shareholder

According to The Economic Times, Walmart (WMT) could soon announce a majority stake in Flipkart, one of India’s leading e-commerce players. The financial daily, citing people familiar with the matter, stated that Walmart could initially acquire a 20.0%–26.0% stake in Flipkart, and eventually raise it to 51.0%.

The report added that Walmart is planning to invest $10 billion–$12 billion to gain a majority stake in Flipkart, which would involve secondary share repurchases from its early investors and large stakeholders. Currently, SoftBank holds the largest stake in Flipkart, followed by Tiger Global and Nasper.

Following the deal, Walmart would be directly pitted against Amazon (AMZN), which has pledged to invest $5 billion in technology and infrastructure to gain the upper hand in India’s booming e-commerce market.

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Walmart strengthening its digital business

Walmart is leaving no stone unturned to solidify its competitive positioning against Amazon. Besides expanding in Japan and eyeing a majority stake in Flipkart, Walmart has launched several customer-friendly initiatives on the home turf to match Amazon’s offerings.

As stated earlier in this series, Walmart is expanding its online grocery delivery and pickup services. It is also testing multiple innovative delivery mechanisms, including delivery directly to customers’ fridges through its associates and Uber.

Meanwhile, the company is focusing on differentiation and recently launched four new exclusive apparel brands, a strategy that has worked well for Amazon and Target (TGT). Also, the company has expanded into the home products category, launching Allswell.

Walmart’s focus on differentiated offerings, value pricing, and enhanced delivery options are likely to support top-line growth.

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