10 Key Takeaways from the Flipkart-Walmart Deal

Walmart finally closed the deal with Flipkart for USD 16 billion, after weeks of rumours and speculations, as it plans to take on rival Amazon in one of the fastest growing markets. The acquisition is Walmart’s biggest foreign investment ever and also one of the most successful exits by an Indian startup. The acquisition was first announced by investor Softbank’s CEO and founder Masayoshi Son followed by an official statement from Walmart. Here are the ten things you need to know all about Flipkart-Walmart deal:

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1) Bengaluru based Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal (no relation). It was the first major e-commerce company in India and owns well-known platforms such as Myntra, Jabong and PhonePe. It has around 30,000 employees, 54 million active customers and an annual turnover of $2.3 billion.

2) Walmart will pay $16 billion for roughly 77% stake in Indian online platform. The deal will also include $2 billion of funding from new equity in Flipkart. The two companies are in discussions to bring in additional potential investors, diluting the US company’s overall stake. However, Walmart will maintain a clear majority ownership in the company.

3) The remainder of the business will be held by some existing Flipkart shareholders including co-founder Binny Bansal, China’s Tencent Holdings Ltd, Tiger Global Management LLC and Microsoft Corp.

4) Tencent and Tiger Global will remain part of the Flipkart board, while Walmart is expected to get three board seats at Flipkart. It will also have a say in the appointments of the group’s finance, legal and compliance heads. The final makeup of the board might also include independent members.

5) The group CEO for Flipkart, Sachin Bansal sold his remaining 5.5% stake for about $1 billion (Rs 6,700 crore) and exited from the company. “Sadly my work here is done and after ten years, it’s time to hand over the baton and move on from Flipkart,” Bansal posted on his Facebook page after the deal was closed.

6) Binny Bansal sold his partial stake for $104 million (Rs 700 crore) while his 4.24% stake in the company is now valued at $881 million.

7) Japan’s SoftBank is selling its entire stake of more than 20% in the online retailer and will exit with $4 billion (approximately Rs. 27,000 crores) Chief executive Masayoshi Son said. It will fetch about 1.5 times its investment of $2.5 billion in Flipkart just nine months ago.

8) The South African tech and media conglomerate, Naspers will get $2.2 billion for $ million it invested over several rounds starting in 2012.

9) Apparently, Amazon had tried to disrupt the deal by offering to buy a stake in Flipkart last week, but the offer was not considered. Amazon acquisition would also have faced regulatory challenges.

10) The Flipkart-Walmart deal will still have to gain the approval of Competition Commission of India and other regulatory bodies before being finalized. It will give Walmart entry into the emerging Indian e-commerce market, where it will compete with rival Amazon for supremacy.

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13 Comments on "10 Key Takeaways from the Flipkart-Walmart Deal"

 

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psk
May 11, 2018 6:55 pm 6:55 PM

just see this is must for flipkar other wise he will died with compete amazon…

Prithvi
May 10, 2018 9:50 pm 9:50 PM
The author has not mentioned the $ amount in millions invested in Point #8 :- 8) The South African tech and media conglomerate, Naspers will get $2.2 billion for $ million it invested over several rounds starting in 2012. It’ll be interesting to see how Wal-Mart’s predatory approach kills the manufacturers and how soon it happens because whatever Wal-Mart touches, it destroys over time in the name of F.D.I. It follows America First a.k.a US Dollar First. I wish both Bansals could have stayed on for twenty more years and made it a US$40 Billion Dollar company and turned it… Read more »
Sunny | Lucknow
May 11, 2018 4:58 pm 4:58 PM

Too late bro, too late. India has been destroyed inside out very badly. The precious time we’ve lost since independence has no replacement. We just don’t have the momentum now and the population is too high. Thanks to colonial mindsets & education, dirty politics and selfishness amongst a large number of citizens. Bansals should have learnt something from Patanjali but they took the easy way out. They had their compulsions but still.

dragonmonk
May 12, 2018 12:03 am 12:03 AM

@sunny You realize that Patanjali is not a paragon of virtue right? Their CEO quit because he was not being paid properly and Mr. So-called-yoga-baba said that he is doing social service and should not complain about money.

Girish Gowda | BengaLuru
May 11, 2018 11:34 pm 11:34 PM

+1.
Well put.

dragonmonk
May 11, 2018 3:36 pm 3:36 PM
Interesting to see the nationalists trying their hand at being ‘pseudo-economists’. Bansals own less than 10% of the company. So, they are not owners, just minority shareholders. Whether they stay or not is a decision of the majority shareholders. Both have been moved into unimportant roles after the arrival of Kalyan Krishnamurthy on behalf of Singapore’s Tiger Global. Flipkart (just like amazon.in) has been bleeding money and finding it more and more difficult to raise money. So, the company could not have asked for a better outcome than a takeover by Walmart. What’s with the blabbering about Make in India?… Read more »
Girish Gowda | BengaLuru
May 11, 2018 11:33 pm 11:33 PM

Good to see Chinesemonk batting for China.

Priyansh Singh
May 11, 2018 11:09 am 11:09 AM

Now at least his comment shouldn’t have been edited. What is wrong with people?

Sandeep Bansal, Manipal
May 11, 2018 8:24 pm 8:24 PM

Hey!!!
Long time, no see!!!

Priyansh Singh
May 14, 2018 6:01 pm 6:01 PM
Yaa Bro, its been around 2 months time. Actually I had met with an accident which injured my left foot and after that I also had my CA Exams coming up in May ’18 so restrained from going through all the articles/comments section on TT. Since Exams are over you would see me now & then. But I know about the majority of the Developments here especially how you should look forward to get a decent telecom circle if you can’t get the desired speeds & coverage at your location. Never Mind, I replied to one of your questions over… Read more »
Prithvi
May 11, 2018 9:16 am 9:16 AM

To the writer: On point #8, How much did Naspers invest initially? You forgot to mention the figure.

Arena
May 11, 2018 6:40 am 6:40 AM

Lol, gone crazy?? Dollar first??…u forgot market places can’t sell on their own to be predatory, …..and Flipkart never a Indian majority company. How will they turn when no Indian invest to burn cash at will…if SoftBank didn’t invest 2.5b last 9 months ago, now Flipkart valuation will be 6-8billion only. Make in India is not correct, it’s burn in India. Bcz these companies burn much cash in the name of offers. Walmart paid beyond Flipkart real value.

dragonmonk
May 11, 2018 3:38 pm 3:38 PM

@Arena Yep!

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