Tag: walmart

Last week, reports emerged from the Flipkart office that an initial agreement of sale to Walmart had been signed. The world’s largest retail chain, Walmart Inc. has now announced that it has agreed to become the largest shareholder in Flipkart Group. The deal is worth approximately US$ 16 billion and will see Walmart own 77% stake in the Indian e-commerce outlet.

Subject to regulatory approval in India, Walmart will pay approximately $16 billion for an initial stake of approximately 77 percent in Flipkart, formally Flipkart Private Limited.

This announcement has also confirmed another rumour started by a previous report. Walmart announced that investors like Tiger Global, Tencent and Microsoft will not cash out completely. Apparently, Softbank, an investor in Flipkart holds a little over 20% stake in the company. With this acquisition, Softbank will exit the company fully and is expected to make up to US$ 4 billion. This is a whopping 60% return on its investment of US$ 2.5 billion in the company it made about eight months ago.

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

Flipkart had a successful previous fiscal year. Walmart said that Flipkart recorded GMV (gross merchandise value) of US$ 7.5 billion and net sales of US$ 4.6 billion representing more than 50% year-over-year growth in both cases. With the investment, Flipkart will leverage Walmart’s omnichannel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength.

The two major players in the Indian online market are Flipkart and Amazon. If this deal goes through, the scenario will remain the same. Amazon has been breathing down Flipkart’s neck in terms of market share as Flipkart continues to have a larger market share. According to a report by Forrester, in 2017, Flipkart’s standalone market share was 31.9%, while Amazon’s was 31.1%.

This deal will only benefit the Indian consumers as both Flipkart and Amazon would be vying for the top spot and make sure their services are better than the other. The implications of this deal will be seen in the months to come and it’ll be interesting to see how Flipkart leverages the financial power of the world’s largest retail chain.

The world’s largest retail chain, Walmart will buy 73% of Flipkart. The deal appears to be imminent as Walmart has prepared to at least US$ 14.6 billion, and as much as US$ 16 billion, in the cash-and-stock buyout of the Indian e-commerce giant. Moreover, Alphabet Inc., the parent company of Google, is said to be ready with a US$ 3 billion investment as well.

According to the report by Factor Daily, one source had valued Flipkart at US$ 20 billion while two other sources said that Walmart had put company’s value at as much as US$ 22 billion. At this price, Walmart will spend more than US$ 16 billion for the acquisition. After meetings went on throughout Thursday, both the parties appear to have signed a tentative agreement. One source said:

Everything has been finalised… The papers have been signed by both the parties.

Flipkart’s CEO, Kalyan Krishnamurthy, and other top-level personnel are expected to maintain their roles. The report cites a few sources, and one of the sources claimed that the deal will be a mix of cash and stock.

Cash component will be close to 55%, which will mark the exit of some of the largest investors in Flipkart.

Softbank, an investor in Flipkart holds a little over 20% stake in the company. With this acquisition, Softbank will exit the company fully and is expected to make up to US$ 4 billion. This is a whopping 60% return on its investment of US$ 2.5 billion in the company it made about eight months ago. Other investors like Tiger Global, Tencent and Microsoft will not cash out completely.

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The two major players in the Indian online market are Flipkart and Amazon. If this deal goes through, the scenario will remain the same. Amazon has been breathing down Flipkart’s neck in terms of market share as Flipkart continues to have a larger market share. According to a report by Forrester, in 2017, Flipkart’s standalone market share was 31.9%, while Amazon’s was 31.1%.

With the deal on the later stages of completion, it could be announced at any moment. Neither of the two parties involved in the deal has made any statements so far. We will update you as soon as we get more information about the acquisition.