Global retail giant Walmart on May 9, 2018 formally signed a definitive agreement to acquire 77 percent stake in Flipkart with an investment of around USD 16 billion. The deal will value Flipkart at around USD 20.8 billion, up from its previous valuation of USD 12 billion. Through this deal, Walmart aims to transform Flipkart into a publicly-listed and majority-owned subsidiary in the future.
- Binny Bansal, Group Chairman at Flipkart, will continue to serve the company, after the completion of acquisition process.
- While, co-founder Sachin Bansal will encash his 5.96 per cent stake in the company which will amount to around USD 1.23 billion.
- Softbank, Naspers, IDG and other large investors in Flipkart will completely exit through this deal.
- Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp will continue on the Flipkart board and will be joined by new members from the Walmart.
The Walmart-Flipkart deal is probably the biggest in the e-commerce space and is expected to impact the whole segment, be it the competitors or the consumers.
The deal has worried the small vendors, who fear of being wiped off from the market. Walmart has a reputation of killing small businesses with its ultra-low prices.
If Walmart brings in its own private labels on Flipkart, it might make it difficult for other sellers to operate. This major concern was shared by the All India Online Vendors’ Association (AIOVA), which has 3500 sellers on large platforms like Flipkart and Amazon.
Walmart’s investment will benefit India in terms of quality and affordable goods for customers, creation of new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.
Walmart’s investment in Flipkart will give an edge to Flipkart to compete with sellers like Amazon. Moreover, Walmarts’s rich extensive experience in retailing, logistics and supply chain management will help Flipkart grow its business without any hassle.