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Flipkart Walmart Deal Explained in 10 Points

Flipkart-Walmart Deal Explained in 10 Points 4o3q63

By Ravi Sharma | Updated: 10 May 2018 15:13 IST

Highlights

Walmart is acquiring 77 percent stake in Flipkart for $16 billion
It will nominate to the Flipkart board
Flipkart co-founder Sachin Bansal is reportedly exiting the company

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The Flipkart-Walmart deal is finally official after weeks of rumours and speculation, meaning more intense competition for Amazon. The Flipkart acquisition was Flipkart, and will help it compete better against Amazon, which is gaining fast in the Indian e-commerce market. 3a4v4v

Walmart will acquire a 77 percent stake in Flipkart for $16 billion (roughly Rs. 1.07 lakh crores), including $2 billion (around Rs. 13,450 crores) as cash infusion. The two companies are also in discussions with additional potential investors who may the round, which will mean a lower stake for Walmart once the deal is finalised; however, it will maintain a clear majority ownership in the e-commerce brand.
Flipkart co-founder Binny Bansal, China's Tencent Holdings, Tiger Global Management and Microsoft will hold the remaining shares in the company.
Tencent and Tiger Global will remain part of the Flipkart board, and Walmart will nominate its own to the board. The board will also include independent .
Co-founder announced his exit from Flipkart and is said to have sold his entire stake in the company to Walmart. He is expected to net around $1 billion (about Rs. 6,700 crores) for his 5.5 percent stake.
Softbank acquired a 20 percent stake for $2.5 billion (about Rs. 16,800 crores) in Flipkart through its Vision Fund last year, and the exit will give it $4 billion (approximately Rs. 27,000 crores). Naspers also sold its 11.18 percent stake for $2.2 billion (about Rs. 14,800 crores).
The Indian startup sector has welcomed this news warmly, and tech industry body Assocham called it a "salute" to the success of Indian startups.
Amazon had reportedly offered to buy a stake in Flipkart last week, but the offer was not considered. A Flipkart-Amazon acquisition would have faced regulatory challenges.
The Flipkart-Walmart deal will have to gain the approval of Competition Commission of India and other regulatory bodies. The deal gives Walmart entry into the fast-growing Indian e-commerce market, where it will compete with rival Amazon for supremacy.
With the sale valuing Flipkart at roughly $20 billion (roughly Rs. 1.35 lakh crores), employees with ESOPs about to vest will make a windfall as this is the highest valuation of the e-commerce player yet.
Walmart in a statement said it “s Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future.”

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