Walmart took over Flipkart by 77% stake

Walmart took over Flipkart by 77% stake

Walmart Inc. acquired 77% stake in one of the India’s largest eCommerce i.e. Flipkart for $16 BN (Rs.1.12 Lakh Crore). The deal values at $20.7 BN and deal to include $2 BN equity funding, sources says. Officially announced on May 9, 2018 Wednesday but it has been in work with more than last 12 months.

The founder of Flipkart, Sachin Bansal sold his approx. 5 percent stake and quit the company for $1 billion and already giving sign to moving his potential time to originally wanted profession as Gamer. But in an ET article clearly mention that “Bansal was expecting to buy more shares and not sell his stake, in the final stage discussions with Walmart”, then why Sachin took this step to retire, this question will remain.

“Sadly my work here is done and after 10 years, it’s time to hand over the baton and move on from Flipkart. But I’ll be watching and cheering from the outside — Flipsters, you better continue to do a good job!” said Sachin Bansal in his Facebook post.

$16 billion is the biggest investment in ecommerce retail industry done by Walmart and this will open the door to enter in Indian Ecommerce Market for Walmart and it start the war to target online consumers against Amazon.

Doug McMillion, Walmart’s President and Chief Executive Officer said,

“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”.

And, Walmart supports Flipkart’s ambition and understand the value of values, that’s why, Doug McMillion added,

“With this deal, we are making a long-term investment in India’s future. We are moving this to sustain India’s economic growth. Jobs will be created. We will invest in local communities. New opportunities will emerge every day and we will move quickly to embrace this change. We are in India to gain new customers, but we see alignment in Walmart and Flipkart in values. We will continue to partner with local Kirana stores.”

And, he also said that “Now, we are in India to gain new customers and India is a priority market for Walmart “and why not, according to financial services Morgan Stanley report that Indian Ecommerce market is expected to touch $200 billion in a decade.

But after the announcement of Walmart that it is about to invest in Flipkart of deal with $16 BN, Walmart shares down about 4 percent on Wednesday and many US investors were not happy with this decision.

Such important things: –

  • After the deal, it will exit company co-founder Sachin Bansal and Softbank Flipkart.
  • Along with this deal, Walmart will make a new investment of $ 2 billion in it.
  • Other companies also interested to buy Flipkart’s remaining share.
  • Binny Bansal will continue his job as a Chairman of Board of Directors with 5.5 percent stake.
  • The deal is yet to get the approval of the Indian Competitiveness Commission and other regulators.

There are more than 40 crore internet users in India but only 14 percent people buying goods or services online and expected to grow 50 percent in 2026, according to a report. It will be interesting to see that how this deal will change the entire Indian Ecommerce Market? And what will be the benefits for consumers? And, we will be update you soon with the answers of these questions.