Walmart e-entry makes India attractive to global majors

10 May, 2018, 14:11 | Author: Brenda Erickson
  • Flipkart’s group CEO Binny Bansal who will also take on the role of chairman after Sachin Bansal’s exit and CEO Kalyan Krishnamurthy are expected to remain at Flipkart after the deal goes through

USA retail giant Walmart has formally announced that it is buying 77 percent of Flipkart's stake for Dollars 16 billion (Rs 1.02 lakh crore). It is the biggest M&A deal in India this year. "This will provide them around 54 million active online buyers and a company with 40 percent of the Indian online retail market".

Here are 5 big deals that turnaround the online retail industry of the world.

The biggest deal in the e-commerce space got signed on Wednesday.

Soon after the deal was announced, Walmart's share price took a beating.

As Naspers accounts for over 20% of South African equity portfolios, some analysts have raised concerns that the national savings pot is too heavily exposed to a single company. A secondary sale was generally frowned upon, being termed as a gamble and a chance.

The New York Times reported that Walmart only came back to the table in November 2017, when it expressed its keenness on buying a minority stake in the company founded by Sachin Bansal and Binny Bansal.

Besides, Softbank, the largest investor, too, has made a decision to sell their 20% stake in the venture, and they will be getting $4 billion on their $2.5 billion investment into Flipkart. Following the confirmation by Masayoshi Son, Walmart released press release concluding the long discussion of over more than 20 months.

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The blockbuster takeover, which is also Walmart's most expensive acquisition, threatens a major blow to rival Amazon's lofty ambitions in India. The retail behemoth's stock is up about 43% from a year ago.

"If there's one thing we can learn from the recent Flipkart saga, it's this: never count out Walmart".

He started his career with an IT firm Techspan in 2005 and then joined Amazon Web Services in January 2006. Paytm with the backing of Alibaba has the potential to become the wild-card, and disrupt the equations. Walmart is paying $16 billion for a controlling stake in the giant online retailer, breaking into a fast-growing economy where it has struggled to establish a foothold. It's easy to get wrapped up in the excitement of Amazon being the most exciting, and now largest, company ever; but Walmart's operational excellence and deep war chest are nothing to sneeze at.

Binny Bansal, Group Chairman at Flipkart, will continue to serve the company, after the completion of acquisition process.

And finally, the last laugh will be of Indian consumers.

But Walmart's keenness in buying American e-com site Jet.com, which it went on to acquire for $3.3 billion, led to the exploratory talks fizzling out. Maintaining a distance with the visitors from Bentonville is seen as the best bet given that opponents can do little to block a clearance since Walmart only needs to inform the Reserve Bank of India about the transaction apart from obtaining approval from the Competition Commission of India, which vets deals above a certain threshold. Other top Walmart executives will also be in India for the announcement, the other source added.

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