Walmart is making a $16 billion investment in India’s e-commerce giant Flipkart, representing a 77 percent stake in the company.
The move will allow Bentonville, Ark.-based Walmart to better compete against companies like Amazon in India, a major growth market for the retail industry.
“Our investment is an opportunity to partner with the company that is leading transformation of e-commerce in the market,” Chief Executive Officer Doug McMillon said in a statement. “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.
The acquisition, which comes amid speculation that Amazon was making a bid, will require regulatory approval in India, where Walmart expects e-commerce to grow at four times the rate of overall retail. Flipkart is estimated to control more than 30 percent of the country’s market.
Walmart previously retreated from global expansion plans in markets like Brazil and the U.K., but said the investment in Flipkart represents a “long-term investment to India’s future.”
The two companies are in talks with other potential investors and Walmart noted its eventual stake in Flipkart could be lower after the transaction is complete, but the retail giant still expects to own a majority share.
Walmart said it expected the deal to negatively impact its earnings in fiscal 2019 by 25 to 30 cents a share.
