Walmart's $16 billion investment for 77% in Flipkart (valuing the company at $21 billion), the Indian online retail leader, is one of Walmart's biggest gambles on growth, and I look at four possible explanations for the deal:
(1) Walmart is playing a pricing game, hoping to flip Flipkart to another investor, just as existing investors in Flipkart did to Walmart.
(2) Walmart is buying an option to enter the growing, highly volatile Indian retail market
(3) The deal will create synergies for Walmart (increasing revenues at its Indian stores) and/or Flipkart (by increasing its online revenue growth or profitability)
(4) The deal is a defensive maneuver meant to slow down Amazon.
Given how large Amazon looms in the fears of both Walmart and Flipkart, and how difficult it is to find justification for the first three reasons, I conclude that it this deal is defensive and that cannot be good news for Walmart shareholders.
Slides: [ Ссылка ]
Blog Post: [ Ссылка ]
Walmart Valuation: [ Ссылка ]
