US retail giant Walmart today announced that it has agreed to take 77 percent stake in Indian e-commerce player Flipkart for $16 billion.
While the remainder of the business will be held by some of Flipkart's existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
"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 a transformation of eCommerce in the market," said Doug McMillon, Walmart's president and chief executive officer.
"As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global, and Microsoft, which will be key strategic and technology partners."
He said: "We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers while creating new skilled jobs and fresh opportunities for small suppliers, farmers, and women entrepreneurs."
"This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India," said Binny Bansal, Flipkart's co-founder, and group chief executive officer.
He said, "While eCommerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and eCommerce to the fore."
Furthermore, Walmart's investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future.
Meanwhile, the statement said that Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart's investment stake moving lower after the transaction is complete. Even so, the company would retain clear majority ownership.