Indian e-commerce market sees M&A deals worth $2.1 billion in 2017

Sergio Conner
May 8, 2018

The protests from trade bodies are not the only hurdle that the Walmart-Flipkart deal is facing.

Should a transaction progress it would represent a significant worldwide capital reallocation for US-based Walmart, which only last week agreed to offload most of its stake in United Kingdom supermarket chain Asda in a £10 billion merger with Sainsbury's.

If the Walmart-Flipkart deal indeed goes through, it would be the largest so far in the Indian e-tailing market that is forecast to grow to Dollars 200 billion by 2026 (Morgan Stanley estimate).

The company began selling books before branching out into electronics and other goods as Flipkart's operations grew. "The frequency of purchases will increase", Vidhya Shankar, Executive Director, Grant Thornton India told PTI.

Reuters had previously reported that Walmart was in advanced talks to acquire 51 percent or more of the e-commerce player for between $10 billion to $12 billion, valuing the firm at some $18 billion to $20 billion. Fortune reports that Google's parent company, Alphabet, is involved in the bidding alongside Walmart, giving the retailer a powerful technological ally in its quest to stave off the advance of Amazon.

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Such a partnership will not only help the Bentonville-headquartered company strengthen its position in the Indian market but also take on global rival Amazon more aggressively. The SJM has said, if allowed, it will open yet another route for entry of Chinese goods into India, as Walmart is the seventh largest importer of Chinese merchandise, where first six are countries; and hit Indian traders and manufacturing. In a round of funding in 2017, Flipkart had been valued at $11.6 billion.

The proverbial tennis match between Walmart and Amazon for the Flipkart Group appears to have gone Walmart's way. The Indian e-tailer will get access to Walmart's products while the latter will be able to leverage Flipkart's well-oiled logistics and supply chain network.

Market watchers say the decision paves way for Walmart to buy stake from a single entity rather than multiple parties. Softbank, one of Flipkart's investors, have been caught wrong footed not expecting a deal to close quickly.

He added that a regulatory authority should be set up for the sector and all deals should be approved by such an authority. Several e-commerce giants like Amazon and Walmart are leaving no stone unturned to make the most of it.

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