BENTONVILLE, Ark. — Walmart is venturing into online retailing in India while retreating from brick-and-mortar operations in the United Kingdom. The company is acquiring a majority share in Flipkart Group, India’s largest online retailer, while planning to merge its Asda Group PLC supermarket unit in the U.K. with larger rival J. Sainsbury PLC.
Subject to regulatory approval in India, Walmart will pay some $16 billion for an initial stake of 77% in Flipkart. The remainder of the business will be held by existing shareholders, including Flipkart cofounder Binny Bansal, Tencent Holdings Ltd., Tiger Global Management, and Microsoft Corp. While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly listed, majority-owned subsidiary.
“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,” said Walmart president and chief executive officer Doug McMillon. “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.”
Bansal, Flipkart’s group CEO, said, “This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India. While e-commerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and e-commerce to the fore.”
Founded in 2007, Flipkart has led India’s e-commerce revolution. The company has grown rapidly and earned customer trust, leveraging a powerful technology foundation, including artificial intelligence, and emerging as a leader in electronics, large appliances, mobile, and fashion and apparel. In a market where Walmart expects online sales to grow at four times the rate of overall retail, and with well-known platforms such as Myntra, Jabong and PhonePe, Flipkart is uniquely positioned to leverage its integrated ecosystem, which is defined by localized service, deep insights into Indian customers and a best-in-class supply chain. Flipkart’s supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily. In the fiscal year ended March 31, Flipkart recorded net sales of $4.6 billion, representing more than 50% year-over-year growth in both cases. With the investment, Flipkart will leverage Walmart’s omnichannel retail expertise, grocery and general merchandise supply chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights, and agile and innovative culture will benefit Walmart in India and across the globe.
In the U.K., the joint venture with Sainsbury would unseat Tesco PLC as the country’s top food retailer. Asda ranks third in market share, and Sainsbury is No. 2. Under the terms of the deal, Walmart would have a 42% stake in the combined business, and would receive about £2.975 billion ($4.097 billion) in cash, subject to customary closing adjustments. It would retain the Asda defined benefit pension scheme, along with any ongoing defined benefit pension-related obligations.
“We believe the combination offers a unique and exciting opportunity that benefits customers and colleagues,” said McMillon. “As a company, we’ve benefited from doing business in the U.K. for many years, and we look forward to working closely with Sainsbury’s to deliver the benefits of the combination.”
The deal is subject to various approvals, including from Britain’s Competition and Markets Authority. Asda would continue to be run from Leeds, England, by its CEO, Roger Burnley, who would join the group operating board of the combined business.