US: Walmart soon to close US$12.7b Flipkart deal

Walmart is getting extremely close to securing a deal that would give it a majority stake in Indian eCommerce powerhouse Flipkart. That deal will reportedly be for US$12 billion at the low end, and experts forecast that the two sides could come to a final agreement within the next two weeks, according to news from Bloomberg.

Reports indicate that all major investors in the firm are on board with the big Walmart buy. Tiger Global Management will sell nearly all of its 20% stake, while SoftBank Group plans to sell off the bulk of its 20%-plus holding. At the end of the deal, Walmart will likely end up with 60% to 80% of Flipkart.

What that will mean remains unclear. Still up in the air is whether or not Flipkart’s founders will continue to lead the business after the purchase.

And, of course, as with any negotiation, it’s very possible the deal will all come to nothing if talks between the two companies fall apart.

If the deal goes through as planned, Walmart will have big access to an emerging market of 1.3 billion possible customers. India is considered global commerce’s next big venue, since China has turned out to be largely uncrackable for outsiders, given the dominance of Alibaba in the nation.

“There isn’t another country with this kind of an opportunity,” said Satish Meena, a New Delhi-based senior forecast analyst at Forrester Research. “India may not be a big deal now, but it’s the future opportunity that Walmart and Amazon are eyeing.”

Amazon also reportedly made a push to buy out Flipkart but, according to insiders, Flipkart’s board determined Walmart could close the deal more easily. Walmart will like have to clear fewer regulatory hurdles since it currently lacks an online presence in India.

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