Walmart’s entry to India means Flipkart’s older retailers will face the axe after the $16 million deal.
US retailer Walmart has finally moved in to take over Flipkart’s business in the country after settling on a 77 percent stake acquisition of the latter in a deal that’s worth $16 billion. The move will see a boost in funds for the Indian e-tailer which will work under Walmart to accelerate the US retailers Indian business.
Flipkart which gained as much as 50 percent on a YoY growth, will still be lead by their CEO, Binny Bansal, as the other founders step down from the once small startup. The deal thus concludes that Walmart will have the most say in the company followed by Tencent, Microsoft, and Tiger Global which occupy minor stakes in the Indian e-commerce firm.
While Tencent and Tiger Global will continue on the Flipkart board, there will be newer members of Walmart who will join as part of the acquisition.
Walmart has clarified that it looks forward to accomplishing Flipkart’s decision and will make efforts to switch to an IPO with major shares to be sold in the future. With the influx of this much money, Flipkart will be looking to make use of the US retailer’s knowledge and strategy on retail, grocery, and general stores.
It’s said that both companies will operate distinctively in the country. Walmart India will work on expanding its Best Price Cash and Carry business in India which already amounts to 21 stores along with a fulfilment centre across 19 cities.
Speaking about the deal, Walmart’s CEO Doug McMillon said “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading a transformation of eCommerce in the market. As a company, we are transforming globally to meet and exceed the needs of customers and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global, and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage. Our investment will benefit India providing quality, affordable goods for customers while creating new skilled jobs and fresh opportunities for small suppliers, farmers, and women entrepreneurs.”
Flipkart’s co-founder and now CEO, Binny Bansal said “This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India. While eCommerce is still a relatively small part of retail in India, we see great potential to grow. Walmart is the ideal partner for the next phase of our journey, and we look forward to working together in the years ahead to bring our strengths and learnings in retail and eCommerce to the fore.”
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