Walmart buys 77% of Flipkart for $16 billion

Walmart shares plunge on news of big investment in India

Naspers sells stake in Flipkart

Walmart's challenge to Amazon in the U.S.is on something of a rocky road, but its Flipkart deal will give the retail giant solid footing in India.

A Walmart-Flipkart deal also provide a boost to India's e-commerce market, which remains small compared to other mature markets. According to data from the Sovereign Wealth Fund Institute's transaction database, sovereign wealth funds and public pensions have directly invested US$ 8.89 billion into India in 2017 and US$ 4.68 billion in 2016.

Flipkart now has an even bigger war chest to fend off Amazon in an e-commerce market that Morgan Stanley estimates will be worth $200 billion by 2026. Other than Walmart, Flipkart's shareholders will now comprise of co-founder Binny Bansal, Tencent Holdings, Tiger Global Management, and Microsoft.

Walmart was high on early Wednesday when Masayoshi Son, chief executive officer of SoftBank Group Corp., confirmed during a briefing in Tokyo that the USA retailer had agreed to buy control of Flipkart.

"We view a potential acquisition of Flipkart as potentially negative in the shorter term as it likely leads to earnings dilution", he wrote.

Sachin was reportedly unhappy with the rest of the Board's specific decisions to sell a majority stake to Walmart.

While Walmart and Flipkart will be working closely together and combining their strengths, they will maintain distinct brands and operating structures, Walmart said in its release.

Analysts forecast India's online retail industry to hit $73bn (£53.7bn) a year by 2022, and predict growth to $200bn (£147bn) a year within a decade, as the country's middle class customer base grows and smartphone penetration increases.

"Last night Japan time, [Flipkart] made - reached - the final agreement that Walmart is purchasing Flipkart", Son said, according to a simultaneous translation of his remarks in Japanese. India needs no introduction; it's a fantastically growing market.

Walmart's investment now includes $2 billion of new equity funding, with ongoing discussions occuring with additional potential investors interested in joining the round, which could result in Walmart's investment stake moving lower after the transaction is complete. It is expected that CEO Kalyan Krishnamurthy will remain at the helm of Flipkart with co-founder Binny Bansal to become executive chairman. United States retailer Walmart on Wednesday acquired 77 per cent stake in Flipkart for Dollars 16 billion, the biggest acquisition by a company in India this year.

With Flipkart out of the portfolio, Naspers still holds a huge chunk of online tech real estate in India.

Walmart brings with it experience in areas of traditional retail such as logistics, sourcing of goods and supply chain, which could be leveraged by Flipkart to strengthen its operations.

Biotechnology major Biocon Chairperson Kiran Mazumdar-Shaw said the deal was an endorsement for India's first e-tailing company. It's also looking to support small businesses, farmers, and Make in India initiatives.

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