Walmart acquires Flipkart for $16 bn, world’s largest ecommerce deal

[Kool_SRG]

Walmart Inc. on Wednesday announced its high profile acquisition of Flipkart for $16 billion for a valuation of over $20 billion, making it the largest ecommerce acquisition in the world. The Bentonville company has acquired 77% of the Bengaluru-based company, as per sources. 

This is also the largest buyout for the US company with its biggest bet ever in online space and on India, underscoring the growing digital consumption potential in a country of 1.3 billion. 

The Wednesday announcement culminates discussions between Walmart and the Bengaluru company that began in September 2016 with Walmart’s plans to pick a minority stake in Flipkart. The talks pivoted earlier this year towards the world’s largest retailer acquiring Flipkart. 

ET was first to report on the talks between Walmart and Flipkart on 27 September, 2016. 

The deal, which will see founder Sachin Bansal exit completely, will now pit US-based giants Walmart and Amazon in the Indian market, which experts say will help in growing the share of online retail in the country. 
 

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,” said Doug McMillon, Walmart’s president and chief executive officer in a statement . 
 

 

McMillon added that the company is also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. “We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.” 

 

“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India,” said Binny Bansal, Flipkart’s co-founder and group chief executive officer. 

Structure, Financial Implications and Other Details 
Walmart’s investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future. Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart’s investment stake moving lower after the transaction is complete. Even so, the company would retain clear majority ownership. Tencent and Tiger Global will continue on the Flipkart board, joined by new members from Walmart. The final make-up of the board has yet to be determined, but it will also include independent members. 

Closing is expected later this calendar year, subject to regulatory approval. 
 

To finance the investment, Walmart intends to use a combination of newly issued debt and cash on hand. Upon closing, Flipkart’s financials will be reported as part of Walmart’s International business segment. If the transaction were to close at the end of the second quarter of this fiscal year, Walmart expects a negative impact to FY19 EPS of approximately $0.25 to $0.30, which includes incremental interest expense related to the investment. 
 

 

"This allows Walmart to jump into a high-growth market, and results in two global players focusing on the growth of the Indian ecommerce market,” said Prasanto Roy, vice-president of NASSCOM’s Internet council. 

“The ecommerce fight ahead should be less about market share than about growing the market manifold.” 

The deal is also expected to generate wealth in crores of rupees for founders, investors as well as several employees. 

“The distribution of wealth will be inspiring. We haven't had such as situation since Infosys. It will inspire many more Indians to take the entrepreneurial path in the coming years,” said Vani Kola, managing director of Kalaari Capital. 
 

Walmart intends to keep the current management of Flipkart and the Bengaluru team will report to Marc Lore, CEO of Walmart’s US e-commerce, whose company Jet.com was acquired by Walmart for $3.3 billion in August 2016. 
 

Amazon founder Jeff Bezos had committed $5 bn to India, and the investments in its India business are expected to cross the mark soon. 

The Amazon marketplace business in India alone has received over Rs 20000 crore , with significant investments also going into its cloud business and the newly launched food retail segment. 

Overall, the Walmart-Flipkart deal is expected to be a good boost for the ecommerce sector and may bring in some rationality, according to Sanjay Sethi, CEO of ShopClues. 

"Walmart is a long-term player, and it might bring in more rationality into the market,” Sethi said. 

[TampaChinnodu]

site pettina kotha lo amazon website ki ditto website xerox copy laa vuntunde flipkart. amazon experience ni baaga vaadukunnaru founders. 

haven't seen recently. 

[Kool_SRG]

3 minutes ago, TampaChinnodu said:

site pettina kotha lo amazon website ki ditto website xerox copy laa vuntunde flipkart. amazon experience ni baaga vaadukunnaru founders. 

haven't seen recently. 

Flipkart one co-owner used to be a Amazon Employee earlier....ALso used only sell books first.

I feel flipkart is better than Amazon at least as per my experience, website is also completely different...