Uncovering the mystery over the much-anticipated deal between Walmart and Flipkart, the head of Japanese technology company, SoftBank Group Corp, said that the US retail giant is acquiring the Indian e-commerce company. Softbank founder and CEO Masayoshi Son reportedly said, "Last night, Japan time, it (Flipkart) reached final agreement that Walmart is purchasing Flipkart." Son revealed this development on a SoftBank earnings conference call, ahead of an expected announcement by Walmart-Flipkart on Wednesday, said a Reuters report.
 
According to the report, Walmart would invest $16 billion in Flipkart for a controlling stake of more than 51 percent at a valuation of over $20 billion. The Walmart and Flipkart deal is the largest buyout for the US company with its biggest bet ever in online space and on India. Buying a stake in Flipkart will give Walmart access to the vast Indian e-commerce market that, according to Morgan Stanley, will be worth an annual $200 billion in a decade.
 
Earlier media reports said that Amazon.com Inc, Flipkart`s biggest rival in India, had made a formal offer to buy 60 percent of Flipkart, besides proposing a $2 billion breakup fee to convince the Indian e-commerce firm to discuss its offer. Sources told Reuters that Amazon had shown an interest in buying Flipkart, but said a deal with Walmart was much more likely to go through. 
 
SoftBank`s investment in Flipkart had grown to $4 billion, Son said. SoftBank`s Vision Fund, the world`s biggest private equity fund, had in last August invested $2.5 billion in Flipkart. SoftBank’s sprawling empire encompasses telecommunications, financial-technology, solar energy, ride-booking services and the Pepper companion robot.
 
Ajay Srinivasan, Director, CRISIL Research, said, “The deal indicates the attractiveness of India’s consumption market for global majors. With Walmart acquiring stake in Flipkart, we expect enhanced thrust on the online grocery segment. We expect online grocery to be the fastest growing segment in the e-retail space, growing at a 65-70% CAGR to touch Rs 100 billion in revenues by fiscal 2020.”
 
Key facts about Flipkart
 
The Indian e-commerce company was founded in 2007 in Bengaluru by Sachin Bansal and Binny Bansal. The Bansals, who are not related, met in 2005 at the Indian Institute of Technology, Delhi. They are both former employees of Amazon.
 
Flipkart, which was founded in 2007 in Bengaluru by Sachin Bansal and Binny Bansal, first sold books, and then expanded to sell music, movies, games, electronics and mobiles. The first book it sold was John Wood’s Leaving Microsoft to Change the World. 
 
In 2010, the Indian e-commerce company launched logistics arm Ekart and started the now popular cash-on-delivery service. It opened its first office in Bengaluru in 2008, and then in Delhi and Mumbai in 2009. 
 
In 2011, Flipkart domiciled to Singapore, as the company aspired to woo foreign investors to fund rapid growth.
 
Flipkart sells 8 million products across 80 plus categories, and has 100 million registered users, 100,000 sellers, 21 warehouses, 10 million daily page visits.
 
In 2016, Binny Bansal took over as chief executive officer (CEO) and Sachin Bansal became executive chairman.
 
In 2014, Flipkart bought online apparel retailer Myntra in a reported deal worth about $300 million, and also acquired Jabong for $70 million in 2016.
 
In 2017, Flipkart offered to buy rival Snapdeal but the deal fell through. SoftBank, Flipkart’s largest investor, also has a stake in Snapdeal, as does China’s Alibaba Group Holding Ltd.

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Quote by Ajay Srinivasan, Director, CRISIL Research, on the subject : Walmart to take control of Flipkart

“The deal indicates the attractiveness of India’s consumption market for global majors. With Walmart acquiring stake in Flipkart, we expect enhanced thrust on the online grocery segment. We expect online grocery to be the fastest growing segment in the e-retail space, growing at a 65-70% CAGR to touch Rs 100 billion in revenues by fiscal 2020.”