Walmart acquiring India's Flipkart, says SoftBank's Son

The deal is likely to value Flipkart at roughly $18 billion to $20 billion

The deal would deliver a blow to Amazon, which has been expanding aggressively since it entered the Indian market in 2013. However, the top rung leadership of Walmart chose to takeover a larger share, in order to make a dent in the Indian market.

The acquisition, amounting to $16 billion, is the costliest ever in the e-commerce sector.

The American retail majors shares fell over 4 per cent on the New York Stock Exchange at around United States dollars 82.13 apiece.

The retail giant declined to give a specific timetable on profitability, saying only that Flipkart's losses should decline "in the mid to long term".

The shares took a beating amid concerns that the deal could impact profits of Walmart. In 2017, the company thought it would make more sense to join forces with Flipkart than continuing to play by itself in one of the fastest growing markets for online retail globally. The credit firm rates Walmart AA, the third-highest investment grade.

"India is one of the most exciting markets in the world. And it fits right in with our strategy", Judith McKenna, Walmart's worldwide chief executive officer, said in a phone interview.

"It will adversely affect both online and offline retailers as the Indian e-commerce space is already crippled with malpractices and predatory pricing", Pravin Khandelwal, the body's secretary general, told AFP.

With a huge user base, India looms as an attractive market for retailers.

Amazon says household products and groceries will grow to account for half its India business, and it aims eventually to deliver everything within two hours. It now operates 20 wholesale clubs in India that serve small businesses.

Walmart's investment includes $2 billion of new equity funding, which is aimed at helping Flipkart spur growth.

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A new investor joining could lower Walmart's stake, but the company plans to continue to retain majority control of Flipkart, it added. Flipkart will maintain a separate brand and operating structure, the companies said.

"But strangely", the SJM said, "Walmart is using the e-commerce route to circumvent the rules to attack (the) Indian market".

The deal also attracted the attention of Jeff Bezos, the richest person on the Bloomberg Billionaires Index.

Flipkart had net sales of $4.6 billion in its latest fiscal year.

"We want this government to assure us that the interests of small traders will not be hurt", Panwar said. "Nobody will be better positioned in Asia than we will be".

Other investors like Naspers and eBay said they sold their holdings in Flipkart. Walmart has tried to make a bigger push into apparel online with acquisitions like Bonobos and ModCloth, along with a partnership with department-store chain Lord & Taylor.

Reuters previously reported that Walmart was in advanced talks to acquire 51 percent or more of the e-commerce player for $10 billion to $12 billion, valuing Flipkart at some $18 billion to $20 billion.

The report noted that as Amazon focused on fashion and grocery in 2017 and 2018, "Flipkart will find it hard to retain its edge in 2018".

The Flipkart Group includes fashion portals Myntra-Jabong, payments unit PhonePe and logistics firm Ekart. "We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners".

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