American Multinational Retail corporation Walmart inc buys the India’s most valuable startup and online retailer Flipkart. Walmart inc acquired a 77% share in online retailer flipkart for $16 billion
(Rs.1.12 lakh crore). This is one of the largest
E-commerce deal ever done anywhere in the world.
This is Walmart inc’s second inning in India and now partnership with flipkart. Walmart-Flipkart combination will have the battle with America’s Amazon and China’s Alibaba.
The Transaction was officially announced on Wednesday. This has been in the work since 2016.
Walmart has planned to invest $2 billion in the company as primary capital. The rest of the shares will come from the existing investors that is the remaining 23% shareholders like Japan’s SoftBank, Tiger Global (an investment fund based in New York) and South African media and internet group Naspers, and others at a valuation of $19-20 billion,and the sources said, Online search engine major Google-parent Alphabet is also to buy 5% stake in Flipkart and invest $1-2 billion separately later.
Flipkart co-founders Sachin Bansal and Binny Bansal could gain 20-30 percent capital gains tax as their deal with Walmart.
The Walmart deal will make Sachin Bansal richer by $1.04 billion (Rs 7,006 crore),Binny Bansal’s, partial exit can give him take home $104 million (Rs 700 crore). Sachin Bansal, was already announced his exit from the company, had said it in a Facebook post that “it was time to hand over the baton and move on”.
Flipkart’s co-founder,chairman and CEO, Sachin Bansal sell his 5.5% share and exit the company completely, Binny Bansal, Flipkart’s other
co-founder, will stay on the group as CEO, and take the executive chairman’s role at least for the next two years, as the part of the terms of the deal. Kalyan Krishnamurthy, the present CEO of Flipkart, also continues his role.
Funnily, SoftBank CEO mistakenly leaked deal a Hours before the official announcement, SoftBank CEO Masayoshi Som had mistakenly announced the deal at a SoftBank earnings presentation. When questioned, Som sheepishly replied,”Maybe I should not have mentioned that … Well, I can’t take it out!”
Amazon has announced that it would boost in Rs. 2,600 crore into its Indian business unit, Amazon Seller Services. Amazon’s CEO Jeff Bezos has committed an investment of $5 billion for Indian market.
The Indian e-commerce market will be worth $200 billion by 2026.The upcoming clash between Walmart and Amazon is going to be an explosive one. The Indian e-commerce market is expected to grow at a annual growth rate of 30%, from $15 billion in the end of 2016 to around $200 billion by 2026 up from $38.5 billion in 2017.