Wal-Mart Stores Inc. today announced that it has struck a massive $16 billion deal to acquire a majority stake in Flipkart Group, the leader of the increasingly important Indian e-commerce market.

The brick-and-mortar giant is set to receive a 77 percent stake in return for the investment. The acquisition is the culmination of negotiations that started some 19 months ago and, according to some reports, at one point saw Amazon.com Inc. join the fray with a counter-offer.

Like Wal-Mart, the company is aggressively targeting the Indian market. The past few years have seen Amazon spend billions of dollars on building out its operations in the nation, which ranks as the world’s fastest-growing major economy. The country’s population of over 1.3 billion remains a mostly untapped market for online retailers.

But despite Amazon’s recent efforts to address this opportunity, it continues to lag behind Flipkart. The latter firm launched in 2007 when India’s e-commerce market was only taking shape and has since established a dominant position with more than 54 million active customers. It expects to ship $7.5 billion worth of merchandise in 2018.

“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 eCommerce in the market,” Wal-Mart Chief Executive Officer Doug McMillon said in a statement.

The Flipkart investment represents the largest such deal in the company’s history. Wal-Mart’s offer includes $2 billion in equity financing that will go toward fueling the continued growth of the e-commerce company. In a press release, the firms divulged that they’ve engaged other investors about possibility of raising even more capital for the expansion.

Taking in additional funding might lead to a reduction of Walmart’s stake. But the company said it’s intent on remaining the majority owner, with a plan to support what it described as “Flipkart’s ambition to transition into a publicly listed, majority-owned subsidiary” further down the road. 

With Wal-Mart at its back, Flipkart could make the international e-commerce market considerably tougher for Amazon in the long run. Walmart expects to complete the transaction by the end of its second fiscal quarter in July.

Photo: Mike Mozart/Flickr