It's official. Walmart has wrapped up Flipkart which is the best online shopping store in India acquisition for $16 billion, a valuation of over $20 billion, which makes it the world's biggest e-commerce deal. Walmart will own around 77 percent of the Bengaluru-based company in what is also being seen as the largest buyout for the US firm. The deal, which will see founder Sachin Bansal exit completely, will now pit US-based giants Walmart and Amazon in the Indian market.
With Walmart’s acquisition, the e-commerce industry in India is set to get even more exciting. With Alibaba’s wish to capture the Indian market and Amazon’s heavy presence in the country, Walmart will now be able to finally find a good place in a market that has embraced e-commerce wholeheartedly.
Entrepreneur India takes a look at the highlights of the Walmart-Flipkart deal
Walmart Takes Over Flipkart
The talks between Walmart and Flipkart authorities had started in late 2016, with the global giant looking for a minority stake in the Indian e-retail, according to reports. Over the following months, the deal progressed. Until recently, reports suggested that Walmart could take up about 55 percent in the company while competitor Amazon too reportedly bid for 60 percent.
However, the company put all rumors to rest on Wednesday evening as it declared that it’s taking up 77 percent of the company for $16 billion, at a valuation of $20 billion. The rest of the business will stay with its earlier investors Tiger Global Management LLC, China's Tencent Holdings Ltd, Microsoft Corp, and Flipkart co-founder Binny Bansal.
Sachin Bansal Bids Goodbye
Flipkart’s journey is one of the most remarkable ones in the Indian startup ecosystem. Two Amazon employees Sachin Bansal and Binny Bansal rented out a 2BHK, to start their own little e-commerce company, which earlier was slated to sell USBs and drives and then evolved to be an online bookstore. Flipkart’s tweet from 2009 said, “Hi earthlings, I am Flipkart.com. I am a website, I speak English and I know a lot about Books that you all read.”
But soon Sachin Bansal and Binny Bansal took over the Indian marketplace. The duo who built the company from scratch brought it up to be one of the highly valued companies in the country. But the Walmart acquisition also sees co-founder Sachin Bansal’s exit. Both the Bansals (not related) are set to gain $1 billion from the deal.
Walmart Adds Fresh Equity Funding
While issuing the statement, Walmart has said that it will use newly issued debt & cash to finance the investment. The global giant is also pumping in $2 billion of fresh equity funding to grow Flipkart’s business in the country. CEO of Walmart Doug Mcmillon said in a statement that India is one of the most attractive retail markets in the world and their investment in Flipkart is because of the company’s leading role in transforming the Indian e-marketplace. Walmart is also eager to take forward Flipkart’s dream of being a publicly listed company.
According to reports, Walmart is also looking at Flipkart’s earlier acquisitions like Phonepe to expand their businesses.
Softbank Exits With $4 Billion
While everyone awaited the news of the deal, SoftBank CEO Masayoshi Son accidently let the cat out of the bag. During an earnings webcast, Son confirmed the Walmart-Flipkart deal even before it was confirmed by the companies themselves.
Softbank which had earlier pumped in $2.5 billion into Flipkart, exits the company by selling its 20 percent stake for $4 billion.
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