Walmart to buy 77% stake in India's Flipkart for $16bn

Walmart has agreed to buy a 77% stake in Indian online retailer Flipkart for $16bn.

The remainder of Flipkart will be held by some of its existing shareholders, which include co-founder Binny Bansal, Tencent Holdings, Tiger Global and Microsoft.

Walmart's immediate focus will be on serving customers and growing the business, but more long-term, it will support Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary.

Walmart's president and chief executive officer, Doug McMillon, said: "India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of ecommerce in the market.

"As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs."

Walmart’s investment includes $2bn of new equity funding, which will help Flipkart accelerate growth in the future. In addition, both companies are in discussions with additional potential investors who may join the round, which could result in Walmart’s investment stake reducing after the transaction is complete, although it would retain clear majority ownership.

If the deal closes at the end of the second quarter of this fiscal year, it is expected to have a negative impact on FY19 earnings per share of around $0.25 to $0.30, which includes incremental interest expense related to the investment.