Walmart pays $16 billion for 77 per cent Flipkart stake

11 May, 2018, 03:56 | Author: Leah Owens
  • The deal is likely to value Flipkart at roughly $18 billion to $20 billion

In a unusual coincidence, the deal, valuing Flipkart at $20.8 billion, was announced to the world by SoftBank Chief Executive Masayoshi Son in a webinar with investors hours before Walmart did so.

With Wal-Mart at its back, Flipkart could make the global e-commerce market considerably tougher for Amazon in the long run. Online sales in the world's second most-populous nation are growing about 35% a year, according to data tracker Euromonitor, fueled by a rising middle class and urbanization that present an attractive environment for e-commerce.

Sources close to the matter claim that Amazon India is already busy chalking extensive plans on how to combat the rejuvenated Flipkart post Walmart deal. In its projections, Walmart has indicated that it expects Flipkart's operating losses to nearly double from its fiscal 2017 level of Rs 4,586 crore to Rs 9,111 crore by fiscal 2020.

The deal hasn't gone down well with the tens of millions of small traders who for years used political muscle to slow the arrival of global retailers.

Walmart acquired the stake from among others, Flipkart co-founder Sachin Bansal, who has now exited the firm completely, and from Naspers which sold its 11.18% stake.

U.S. retail giant acquires stake at $21 billion valuation; Sachin Bansal exits.

Walmart entered India in 2009 through a joint venture with Bharti Enterprises, and took full control of that business in 2013. While further investments in Flipkart could bring down Walmart's overall stake in the company, it said that it would retain "clear majority ownership".

"While eCommerce is still a relatively small part of retail in India, we see great potential to grow".

Buhari On A Four-Day UK Trip To See His Doctor
Buhari said he will be away for four days and plans to be back in Nigeria's capital of Abuja on Saturday, May 12. The last time he was in London was for a stopover whiles returning from an official visit to the White House.

Secretary-General Strongly Condemns Attack in Nigeria
The bloody attack by bandits took place in Gwaska Community in Birnin-Gwari Local Government of Kaduna State at the weekend. Birnin-Gwari has recorded several attacks by armed bandits alleged to be cattle thieves and other criminal gangs this year.

Thousands Protest against Macron in Paris amid Heavy Security
Mr Macron said France played a geo-political and military role in this zone, with the presence of 8,000 soldiers. Paris authorities have ordered 2,000 police officers onto the streets on Saturday.

Tencent Holdings Ltd, Tiger Global Management and Microsoft Corp will also continue to remain shareholders in Flipkart, Walmart said without divulging their stake. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage.

In its news release, Walmart also cast the acquisition as creating jobs within India's economy and supporting small business, even giving a nod to Prime Minister Narendra Modi's "Make in India" campaign. The big advantage that Amazon always had over Flipkart was the unlimited cash it could plough into the growth of its Indian business.

"Flipkart will continue to be a marketplace where sellers from around the country can connect with customers".

How does the Flipkart buyout help the Indian start-up ecosystem?

To get an early advantage in the nascent grocery industry in India, Future Group is all set to launch e-commerce app for grocery delivery offering the daily and weekly requirements to consumers. This is an extension of Walmart's global expansion strategy.

Home to 1.3 billion people, India has seen the size of its middle class surge.

Meanwhile, Amazon is also still fighting hard in India, with founder Jeff Bezos saying last month that Amazon.in had the most-downloaded shopping app in India for 2017.

On top of that, Google too has chipped in with $1.5 billion for controlling 7% stake in the new Flipkart, powered by Walmart, and this changes so many things for the entire eco-system.

Recommended:



Popular

Trump Considers Sidelining Theatrical Giuliani from TV Interviews
Although Trump has hinted that such a move could be coming, the detainees have not yet been released as predicted by Giuliani. Since joining the Trump legal team, Giuliani has attracted attention for his series of weird interviews .

Emergency alert system to be tested in Nova Scotia Wednesday
In Manitoba, Bell MTS and other service providers sent messages to customers this week giving them a heads-up about today's test. The public alert system was tested in Ontario and Quebec on Monday and experienced what were described as "serious glitches".

Israel's Netanyahu serves offensive dessert in a shoe to Japanese PM Abe
However, it is still hard to imagine how Moshe's team could conceive that a dessert shoe would be a good idea. Celebrity Israeli chef Segev Moshe creation caused outrage on Instagram where he proudly put up his creation.

Malaysia's ruling coalition takes slight lead in election count
It also claimed that "wildly" different sizes of parliamentary constituencies meant it was much easier for him to win a majority. Bridget Welsh, a Southeast Asia expert at John Cabot University in Rome, said attributed the opposition's gains to Mahathir.

ZTE Business Operations Grind to a Halt Due to US Export Ban
And the crackdown has been interpreted as part of a broader push by the United States to stifle China's tech ambition. A US delegation traveled to Beijing last week to discuss the brewing trade conflict with their Chinese counterparts.

All New California Homes Must Incorporate Solar
Constructing a home in accordance with the new rules will add about $9,500 in immediate costs, according to estimates by the Energy Commission.

Nicki Minaj and Cardi B Bury Their Beef At Met Gala
The Instagram account below shared a photo that made it seem as though Cardi was still hating on Nicki . Minaj later admitted in an interview that she wasn't happy with how she turned out as the bad guy.

Buhari Jets Off To The UK For Medical Trip
But he expressed hope that the president would "be back in the country on Saturday by the grace of God". Buhari however spent 51 days following medical advice to run some recommended tests by his doctors.

Facebook does its biggest-ever management reshuffle and embraces blockchain
According to Recode , these latest changes at Facebook represent the "biggest executive shakeup in its 15-year history". The product and engineering groups are being reorganized into three main divisions, Recode reports.

Latest

Tendencies