SoftBank CEO Masayoshi Sen let the cat out of the bag during the firm's earnings call on Wednesday. He has confirmed that Walmart is acquiring majority stake in Flipkart. SoftBank has sold its entire over 20 percent stake in the company for $4 billion. It had acquired that stake for an investment of $2.5 billion last year.
Flipkart is expected to send out a press announcement on Wednesday, where further details will be revealed. We will share updates as we get more details.
This caps months of speculation. Initially, it was rumoured that Walmart would take a simple majority in the company. But the company is now acquiring over 70 percent stake in Flipkart.
Traditional foe Amazon had made a last-minute bid for Flipkart. While SoftBank, and even Tiger Global initially, preferred Amazon, the management and other investors preferred Walmart. Tiger first decided to side with management and finally SoftBank too agreed.
The deal is expected to be the largest ecommerce acquisition in the world and will be one of the biggest tech M&As.
The deal brings the Walmart-Amazon battle to India. While, everyone expected an Alibaba-Amazon fight, Walmart's entry has made this a three-horse race. Alibaba-backed Paytm Mall is the only other significant multi-category e-tailer in the country, after Snapdeal flamed out.
Like Paytm Mall, Walmart-backed Flipkart is expected to make a serious foray into omni-channel retail, especially in the grocery category. An analyst said Amazon too will soon announce an investment in an offline grocery retailer, similar to its investment in Shoppers Stop.
Walmart has been struggling to enter the Indian retail market for over a decade - it has a presence in India through around 20 wholesale stores. This deal gives them a toehold.
Flipkart too can take its focus away from fund raising and increasing valuation to taking long term decisions, now that it has a deep-pocketed and patient parent.