Reports in Reuters this morning indicate that Walmart is closing in on buying 40 percent of Indian eCommerce giant Flipkart.
The move comes as a very direct challenge to Amazon.com for domination of Asia’s third-largest economy.
The deal, if it goes through, would represent one of the largest overseas deals Walmart has ever contemplated — and reports indicate that the U.S. retailer will begin its due diligence work sometime early next week.
As for what kind of deal is on the table, specifics are not known — but one can rationally expect it to come with a high price tag, given that Flipkart’s last valuation was somewhere north of $12 billion. Japan’s SoftBank bought up roughly a fifth of the firm last year for $2.5 billion.
A spokesman for Flipkart said the company does not comment on rumors or speculation. An India-based representative for Walmart declined to comment at all.
The investment could come at a critical time for Flipkart, which faces an actively and aggressively expanding Amazon seeking to cut in on its home turf. For Bentonville, Arkansas-based Walmart, a deal would open a new front in is ongoing war for commerce dominance with Amazon.
“As large as they [Walmart] are, Amazon has eaten away a significant chunk of their revenues and I think…they view India as the largest market possibly for this [taking on Amazon],” one of the sources said. Walmart has made efforts to enter India for some time, but has been largely held to a ‘cash-and-carry’ wholesale business amid tough restrictions on foreign investment.
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