Walmart buys 77 per cent stake in Flipkart for $16 billion

US retail giant Walmart has signed a definitive agreement to acquire a 77 per cent stake in India’s largest e-commerce marketplace Flipkart with an investment of around $16 billion, making it the largest transaction in history of the online retail space globally.

The deal, which wiped away $10 billion of Walmart’s market capitalisation as investors reacted negatively in early morning trade on the New York Stock Exchange, stands out for several exits. The biggest was Sachin Bansal selling his entire 5.96 per cent stake for $1.23 billion and parting ways with Flipkart that he had founded in 2007 along with friend from IIT, Binny Bansal (not related). Sachin was nowhere around at the Flipkart campus when the Walmart top team led by CEO Doug McMillon addressed employees in a townhall meeting Wednesday evening.

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Another significant exit is that of SoftBank, the largest investor in Flipkart. In a strange coincidence, the deal, valuing Flipkart at $20.8 billion, was announced to the world by SoftBank Chief Executive Masayoshi Son in a webinar with investors hours before Walmart did so. He also confirmed that SoftBank would get about $4 billion from its $2.5-billion investment in Flipkart last August.

Flipkart’s valuation at $20.8 billion is a 75 per cent increase over its previous valuation in the range of $11-12 billion last August. Out of the $16-billion investment, Walmart will put in $2 billion in new equity funding, while the rest will be utilised to acquire stakes of existing investors in the Bengaluru-based company.