After the rumors comes the official announcement: with an investment of 16 billion dollars Walmart acquires control of Flipkart and, through India, it deals a severe blow to its bitter rival Amazon which is trying to expand in New Delhi, considered an increasingly expanding market.
The war between the two giants therefore continues with no holds barred, but Wall Street does not seem to appreciate the novelty and punishes the Wallmart stock with a shower of sales. At 17.00 (Italian time) the stock dropped 4,2% to 82,09 dollars.
Going into the details of the agreement, Walmart to acquire 77% of Flipkart, India's largest e-commerce company, founded – ironically – by two former employees of the company led by Jeff Bezos.
As mentioned, iThe cost of the operation is 16 billion dollars, a figure that represents not only the largest foreign direct investment ever made in India, but also the largest deal taken home by Walmart in its long history. The acquisition of Asda which took place in 2011 for 10,8 billion moved into second place. The same company, last April 30, was sold to Sainsbury's for £7,3bn. The investment made official today, according to what the company explained, includes 2 billion intended to finance the expansion of online food sales.
The remaining shares of Flipkart will remain in the hands of the current partners, namely: Tencent, Microsoft and Tiger Global Management, while Softbank has decided to sell its stake to Walmart for 4 billion dollars. The confirmation of the operation came from the CEO of the Japanese holding company.
The e-commerce market and the large-scale distribution market they are increasingly intertwined and continue to represent a real battlefield for two giants who in recent years have been "beating each other up" with acquisitions and sales. It was Amazon who launched the gauntlet, which in 2017 decided to enter the US retail market by taking control of Whole Foods Market for $13,7 billion and putting Walmart in serious difficulty, which is the absolute protagonist of that market.
However, Walmart reacted and managed to fool Jeff Bezos' company in India, that is to say in a market where the latter has promised to invest 5 billion dollars. Doug McMillon, CEO of Walmart, defined India "one of the most attractive retail markets in the world". For him, Flipkart is a company "that is leading the transformation of the ecommerce market". Not surprisingly, according to Morgan Stanley, the aforementioned market could reach a value of 200 billion in the next decade.
