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:
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.