Walmart is scheduled to announce its takeover of Flipkart on May 9 or 10. According to sources, the US-based e-commerce company will takeover 70 to 75 percent of Flipkart valued at $15 billion. The reliable sources reveal that the Walmart’s chief executive is coming down to India to announce the deal.
In addition to Walmart, Google-owned Alphabet will also invest in Flipkart. You can expect better availability and price for Google-owned products such as Google Pixel, Google Home and much more.
There are reports that Walmart has valued Flipkart at $20 billion. The company will infuse $2 billion directly in the form of fresh equity. If the reports are to be believed, Flipkart co-founder Sachin Bansal will exit from the company by selling all his 5.2 percent stake. However, his brother Binny will continue to run the company along with the current CEO Kalyan Krishnamoorthy.
The existing Flipkart shareholders, Tencent Holdings, Tiger Global Management, Naspers, and Microsoft will only retain small stakes after the acquisition of the home-grown retailer by Walmart. The deal is being worked out in such a way that these investors will have an ability to sell their proceeds to Walmart in future at the current valuation worked out by the US-based company.
The main benefit out of this deal is that the founders of the company Sachin and Binny would be richer. However, they are not leaving the company as such and the existing management team will be in disposal for normal work.
#SachinBansal stands to make Rs 6750 crore selling his 5.5% stake at #Flipkart to #Walmart. Mind boggling amount of wealth.
— Arnab Ganguly (@connect_arnab) May 8, 2018
The billion dollar question is that why the founders were unable to run the company in India. What is the need to sell Flipkart to Walmart?
It remains to be seen as to how the sellers react to the acquisition by Walmart. We don’t expect any major changes to the official website although we can see some refinements around October. The existing staff and customer service team will continue to work.
Based on the reports, trade unions have opposed to the merger and is an attempt by the US company to enter India through the back door. The selling of products at deep discounts will hurt millions of traders including small retail shops and merchants. The Confederation of All India Traders has demanded a detailed verification of the Walmart-Flipkart deal since it will encourage discriminatory pricing.
