Walmart-Flipkart deal sealed

By:Vandita Jadeja 2018-05-11

It is finally official that Walmart has acquired Flipkart. The largest retailer in the world will acquire a 77% stake in the Indian e-commerce company for a whopping $16 billion in the biggest acquisition ever. Walmart’s president Doug McMillon mentioned that India is one of the most attractive retail markets in the world and this investment opportunity to partner with the company will be leading transformation of the e-commerce in the market.

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Both the companies will maintain their operating structure and distinct brands with an intention that the Indian company will eventually transform into a publicly listed subsidiary of the US retailer. Majority investors of Flipkart will exit while Tencent Holdings, Microsoft Corp, Tiger Global and co-founder Binny Bansal will remain on board. The final make-up of the board has not yet been announced but it will include independent members.

Amazon was in the fray to acquire Flipkart and was extremely serious about the same. It also offered a breakup fee of $2 billion which is to be paid if the target backs out of the deal. However, Walmart managed to seal the deal and will now take the fight against Amazon in the e-commerce market of India. The Indian e-commerce industry is expected to grow over 13 times to $200 billion by 2026. The deal will help Flipkart leverage the omnichannel retail expertise of Walmart in addition to the grocery and general merchandise supply chain knowledge and financial strength. The deal is a huge milestone for Flipkart.

Flipkart started as an online bookstore in Bengaluru in 2007 and is now the most valued internet company in the country with 30,000 employees. It is also one of the highest funded private companies in the world which has given Amazon a tough time in the last five years. It is backed by investors like Tiger Global, Softbank, Accel Partners and DST Global among others.  Flipkart had sales of $4.6 billion in the year ended March 31 and the sales are 50% higher than that of previous year.

After this deal, the e-commerce industry in India will become a battlefield for two giants, Walmart and Amazon. Both the companies have been competing against each other in the US. This deal is considered to be an extension of the battle. Walmart is the only competitor left for Amazon in the US. It has been growing its operations a lot and Amazon has been increasing its footprint through physical stores.

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