Walmart may take on Amazon in India with a direct investment in Flipkart, Reuters reported Friday, citing people familiar with the company’s plans. The largest employer in the United States is said to be mulling over taking a stake in India’s e-commerce giant and is supposedly interested in acquiring over 40-percent of Flipkart. The negotiations between the two are understood to have been ongoing for a while now, with Walmart reportedly planning to start doing its due diligence as soon as next week. The Bentonville, Arkansas-based company already has a presence in the South Asian country in the form of a wholesale business spanning 21 brick-and-mortar stores. While previous reports indicated the firm has been looking to expand to e-commerce, local regulations wary of foreign investments are said to have kept it away from making a move in that segment so far.
Taking a stake in an established e-commerce platform would hence be easier than launching one under its own brand for Walmart, some industry watchers believe. Flipkart was valued at $12 billion last August when SoftBank’s vision fund acquired approximately a fifth of the firm for $2.5 billion. The Japanese conglomerate offered to buy additional shares in November but at a discounted valuation amounting to $10 billion. Should Walmart’s investment materialize, the company may hence end up paying in the ballpark of $5 billion for such a major stake in Flipkart, thus becoming its largest shareholder. The insiders cited by Reuters suggested the valuation may even surpass $12 billion, without elaborating on the matter. E-commerce platform eBay and China’s tech giant Tencent have smaller stakes in Flipkart, as do Microsoft and New York-based investment firm Tiger Global Management.
In addition to providing Walmart with a long-sought presence in India’s online retail segment, the move would deliver additional backing to Flipkart that’s been fiercely competing with Amazon in recent times. The Seattle, Washington-based conglomerate sees the country as one of its largest foreign growth opportunities, having previously invested in a wide variety of e-commerce ventures and other projects in India. It’s presently unclear whether a deal between Walmart and Flipkart would face any significant opposition from New Delhi’s antitrust watchdog.