Walmart-Flipkart deal may result in physical retail store chain

Walmart's proposed investment in Flipkart will include setting up a chain of physical retail stores in India, according to an Economic Times report citing sources.

Walmart is reportedly negotiating a 30-per cent stake in the India's home-grown online marketplace, but may get only 20 per cent due to objections by Japan's SoftBank, which has a 20.8-per cent stake in Flipkart.

Earlier this month, Reuters had reported Walmart is looking at a 40-per cent stake in Flipkart (See: Walmart eyes over 40% stake in Flipkart: report).

Walmart, Flipkart and SoftBank declined to comment on the matter, according to the ET report.

SoftBank's objections to a Walmart investment in Flipkart have also been reported by Mint. The report said the proposed investment will value Flipkart between $20 billion and $23 billion.

SoftBank's investment had valued Flipkart at about $14 billion.

At present, Walmart cannot open retail stores in India on its own due to foreign direct investment (FDI) regulations in multi-brand retail. It runs 21 wholesale stores in India.

Walmart's proposed investment in Flipkart will help the Indian company expand into the online groceries delivery market, while Walmart will get an entry into the retail business.

The deal will also strengthen Flipkart in its fight against Amazon's growing presence in India.

The due diligence for the deal is likely to begin this week, according to the Reuters report.