Updated story (5.20 pm): Walmart has agreed to buy roughly a 77% stake in Indian online shopping site Flipkart for $16 billion. This makes it the US retail giant’s biggest investment ever as it looks to take the fight to global rival Amazon in one of its key markets, India.

The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, China’s Tencent Holdings Ltd, Tiger Global Management LLC and Microsoft Corp, the company said in a statement on Wednesday. Flipkart co-founder Sachin Bansal to exit company by selling his 5.5% stake to Walmart. Walmart said it expected the deal to knock about 25-30 cents off its earnings per share in fiscal 2019, assuming the deal closes at the end of the second quarter.

It also said that the deal included $2 billion of funding from new equity in Flipkart, which could be sold to additional investors in the future, diluting the US company’s overall stake.

“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,”

Doug McMillon, Walmart’s Chief Executive Officer said.

Original Story (4:00 pm): Softbank announced that it has reached an agreement to sell its stake in e-commerce major Flipkart to US retail giant Walmart. The deal which is expected to be announced this week was unveiled by Softbank CEO Masayoshi Son while announcing the company’s quarterly results, Softbank owned more than 20% stake in Flipkart. Son’s announcement did not include details regarding the size of the deal, the stake acquired by Walmart and any other parties to the deal. Walmart chief executive Doug McMillon is presently in India, multiple news outlets have reported and he’s expected to announce the details of the acquisition soon.

Reports of Flipkart’s sale to Walmart have been covered by various media outlets over the last few weeks. Reuters reported that Walmart and other investors will buy roughly 75% of Flipkart. US  retail giant will invest $2 billion in fresh capital into the online retailer at a valuation of $21 billion and buy the rest of the stake from existing Flipkart investors at a valuation of $17-18 billion, reports said.

Google’s play

The other major speculation about the deal is that Google’s parent Alphabet is expected to participate in the investment with Walmart. Reuters reported that Google is expected to purchase up to 15% in Flipkart (Which leaves Walmart with roughly 60%). Alphabet like Walmart see’s Amazon as a key competitor in the retail space and has recently launched products that are directly aimed at challenging Amazon’s dominance.

With the recent launch of ‘Shopping Actions’ on Google Assistant, the company is said to be encouraging retailers to see it as an ally against Amazon. “We have taken a fundamentally different approach from the likes of Amazon because we see ourselves as an enabler of retail…We see ourselves as part of a solution for retailers to be able to drive better transactions,” Google’s president for retail and shopping Daniel Alegre had told Reuters.

Sachin Bansal to exit

The Reuters report said that Flipkart Group Chief Executive Binny Bansal held a closed-door meeting with the firm’s top leadership at its Bengaluru headquarters on Monday, and added that Flipkart co-founder Sachin Bansal would exit after the Walmart deal is sealed. Flipkart last year named Kalyan Krishnamurthy, a former executive of investor US hedge fund Tiger Global Management, as the head of its core business, while Binny Bansal took the broader strategic role of group CEO. Sachin Bansal remained as executive chairman. The Flipkart Group includes fashion portals Myntra, Jabong, payments company PhonePe and logistics firm Ekart.

Walmart in India

In October 2013, Walmart and Bharti Enterprises had called off its seven-year-old joint venture of wholesale stores business, after allegations of FDI violations and bribery charges which led to the suspension of several Bharti Walmart executives. Following this, Walmart had acquired Bharti’s 50% stake in its joint venture of wholesale stores. In January 2014, Walmart had set up a new company called ‘Wal-Mart India Private Ltd’.

The Government had approved a 51% FDI in multi-brand retail in September 2012, although it came with a rider that at least 30% of the goods sold have to be sourced from local partners. Walmart had asked the government to reduce the local sourcing norm to 15% saying it cannot meet the mandatory 30% norm but the Department of Industrial Policy and Promotion had apparently dismissed this appeal. FDI banned in the direct-to-consumer online retail model, so Flipkart will continue to run with a marketplace model.