US Retail Giant – Walmart has acquired 77 percent of Flipkart’s stake at a $16 Billion giving the company a total valuation of $20 Billion.
As a part of the deal, CEO Sachin Bansal will step down as he has given away his 5.5 % stake in the takeover. Binny Bansal will still be heading the company as group CEO with new management from Walmart filling up other important positions.
Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.
“ 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 transformation of eCommerce in the market. ”
said Doug McMillon, Walmart’s President and Chief Executive Officer (CEO). Along with Walmart, other share holders will be Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
Walmart Adds Fresh Equity Funding
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.
Softbank Leaves With $4 Billion While everyone awaited the news of the deal, SoftBank CEO Masayoshi Son accidently revealed the big secret! 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 per cent stake for $4 billion.
What do we think about it?
Walmart has been trying since years to set-up physical stores in India since the longest time and their CEO, Doug Mc Millon has been meeting top-level government officials off late. This deal helps the brand establish itself in the Indian market and will be able to extend its expertise in managing physical goods in the digital space. Also, we can expect a revamp in the near-future, strengthening Flipkart’s back-end infrastructure.
However, as soon as the news broke out, Walmart’s hares plunged 4% and m-cap went down by $10 billion after the formal deal announcement was made.