After the world’s largest retailer Walmart picked up a 77% stake in Flipkart in a $16 billion deal, the retail giant said that the deal with India’s e-commerce firm will help to ramp up Walmart’s global sourcing from India. In an interview to CNBC TV18, Judith McKenna International CEO, Walmart said that the company see a great opportunity to source apparel and accessories for Walmart from India. Notably, Walmart has agreed to buy up to 77% stake in e-commerce company Flipkart for $16 billion, in India’s biggest foreign direct investment deal to date. “Walmart is cooperating fully with Indian regulatory agencies and the company is confident of getting nod for Flipkart deal,” Judith McKenna told the channel.
“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 e-commerce in the market,” Doug McMillon, Walmart’s president and chief executive officer had said. Sharing the current status of the deal, McKenna said that Walmart only needs CCI approval for Flipkart transaction and the company can operationalise after getting it. “Flipkart transaction is fully compliant with India rules and applied to the Competition Commission of India (CCI) for clearance,” McKenna said.
The deal is being read as Walmart’s way to check on rising competition from Jeff Bezos-run Amazon.com. “Walmart’s justification for investing in Flipkart is not that they expect to generate a reasonable return on their $16 billion investment but that if they do not make this acquisition, Amazon will be unchecked and that their decline will be more precipitous,” valuation guru Aswath Damodaran said in a recent blog. In the interview with CNBC TV-18, McKenna said Walmart is used to competition around the world, in response to taking on Amazon.
Walmart said that post-acquisition, both the partners will leverage their strengths, but will maintain their distinct brands and operating structures. Walmart India Chief Executive Krish Iyer said, “We operate 21 best price cash-and-carry stores and one fulfillment centre in 19 cities across nine states, with 95 percent of sourcing from the country, aiding suppliers, creating skilled jobs and contributing to local economies.”