Retail behemoth Walmart Inc WMT made a major push into the India market Wednesday with an investment in Flipkart, India's leading e-commerce platform.
What Happened
Walmart has agreed to buy a 77 percent stake in Flipkart for $16 billion, the companies said in a press release. The Indian company recorded gross merchandise value of $7.6 billion and net sales of $4.6 billion in its recent fiscal year ended March 31.
Walmart and Flipkart will leverage the combined strength of both entities but will maintain distinct operating structures.
Walmart's India operation consists of 21 Best Price cash-and-carry stores and one fulfillment center across 19 cities. Through the investment in Flipkart, Walmart hopes to find new ways of serving its customers with speed and innovation to grow its business in both the Indian market and internationally.
Why It's Important
Walmart's investment in India may also been as a move to counter Amazon.com, Inc. AMZN, which has also been making major pushes in the Indian market. Specifically, Amazon has already invested billions of dollars in the Indian market and was reportedly interested in buying a 60 percent stake in Flipkart after Walmart's interest was made public.
What's Next
Walmart's investment in Flipkart is expected to close later this year and Walmart says it will have a negative impact to its fiscal 2019 EPS of 25 to 30 cents. In fiscal 2020, the deal is expected to have an EPS headwind of around 60 cents per share.
Walmart shares were down about 5 percent to $81.42 in Wednesday's pre-market session.
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Image Credit: Walmart Corporate from Bentonville, USA (Walmart store exterior) [CC BY 2.0], via Wikimedia Commons
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