In order to contest in a stable manner with Amazon.com Inc., Wallmart Inc. is all set to pay a whopping amount of £11.81 billion or $16 billion to Flipkart. This will enable it to take over nearly 77% stake of the e-commerce company. This is supposedly the largest deal of Walmart Inc., which is speculated to produce splendid growth in the market.
As a result of the deal, the shares belonging to Walmart slipped by 3%. However, the expectation surrounding the shares is not high in the upcoming fiscal year. As per the analysts, the merger will result in the reduction of earnings, which may slip up to 25 to 30 cents each share.
This deal will enliven the status of Flipkart in a high constraint market, especially against Amazon, which had also decided to make a similar offer. As per the Euromonitor, the 27% of the e-commerce market in India is taken over by Amazon. On the other hand, Walmart is operational across the country through the 21 wholesale stores.
The current fiscal year ended with $4.6 billion sales for Flipkart and the upcoming deal will not affect the shares of Amazon and Flipkart in India.
As per Morgan Stanley, the market of Flipkart, which sells apparels, gadgets, living, and lifestyle amenities, may reach up to $200 billion each year with the introduction of Walmart in it.
Flipkart offers diversified areas of growth with its businesses of fashion and payment. Walmart is even hopeful regarding the profits and growth associated with the deal in the future, which will also fetch an enhanced international business.
Senior partner, Neil Stern from McMillan Doolittle retain consultancy said that the prime target was to take a rising opportunity that will support a stable growth in the highly competitive market, rather than getting the hands on the deal.
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