INDIA- The Indian regulator has approved Walmart’s US$16 billion acquisition of India’s largest e-commerce firm Flipkart, its biggest takeover ever in a fast growing retail space.
In May, Walmart announced the acquisition of 77% stake of Flipkart to beef up competition against its rival Amazon who acquired Whole Foods, the American organic products retailer for US$13.7bn last year.
The deal values Flipkart at US$20.8 billion, according to Times of India, is set to disrupt the online delivery space estimated to grow to about US$200 million in a decade.
“Walmart remains committed to contributing to the Indian economy by supporting smallholder farmers, manufacturers, and our kirana customers,” said Rajneesh Kumar, spokesperson and chief corporate affairs officer at Walmart India.
“Flipkart is a prominent player in India with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart.
We believe that the combination of Walmart’s global expertise and Flipkart will position us for long-term success and enable us to contribute to the economic growth.”
Previously, Walmart said it plans to take Flipkart public in about four years’ time soon after the acquisition, something that would builds its foothold in India, a market faced with challenges such as restrictions around foreign investment in physical retail.
The transaction will expand product portfolio for Flipkart, whose strength lies in selling consumer electronics like smartphones, and Walmart’s entry may give it a smart entry into the booming grocery market in India.
Following Walmart’s proposal to acquire Flipkart, representatives in the retail sector including the Confederation of All India Traders came out strongly to oppose the move terming it a possibility of unfair competition that might run local convenience stores out of business.
Representatives from various trade bodies alleged a series of irregularities in the proposed acquisition against the FDI policy/guidelines on e-commerce.
India’s proposed ecommerce policy has been accused of biasness by favouring local companies.
To the American giant Walmart, the nod by the antitrust regulator may be a ‘win-win’ as the policy has in the recent past thought to restrict online marketplaces from not directly or indirectly influencing price of goods and services to their group companies.