How big is the deal, who will benefit, who has opposed it, and what comes next? Business Standard answers key questions on the Walmart-Flipkart deal.
Companies News India : US retailer Walmart Inc said on Wednesday it will pay $16 billion for roughly 77 per cent stake in e-commerce firm Flipkart, as it competes with Amazon Inc in India, which is an important growth market.
With the deal done, Flipkart co-founder Sachin Bansal will be exiting the Bengaluru-based company. According to his Facebook post addressing Flipkart employees, Bansal plans to catch up on gaming and brush up his coding skills.
Here are some key things to know about the deal:
- How big is the deal in dollar terms?
Walmart will pay $16 billion for a roughly 77 per cent stake in Flipkart. According to Reuters, Walmart has said that it plans to fund the Flipkart deal through a combination of newly-issued debt and cash on hand. The investment will also include $2 billion of new equity funding.
This is the US retailer’s biggest deal ever.
Why is Walmart buying a majority stake in Flipkart?
- From Walmart Inc, $16 billion is a small price to pay as it aims to compete with global e-commerce giant Amazon, Karan Choudhury writes for Business Standard.
With this deal, Walmart hopes to finally prop up a formidable opponent against the Jeff Bezos-run juggernaut. According to the report, Walmart hopes that Flipkart will help it understand the e-commerce business better and take on Amazon, not only in India but globally as well.
What does Flipkart get out of the Walmart deal?
- Flipkart co-founder Binny Bansal said Walmart is the ideal partner for the next phase of Flipkart journey as he saw e-commerce having great potential to grow from its current status of being a relatively small part of retail in India.
Walmart will also expand Flipkart’s online marketplace capabilities by bringing in a host of new products and private labels.
What happens to the Flipkart brand now?
- Walmart and Flipkart will remain separate brands, according to agency reports. Further, the Indian e-commerce company will have an independent board. However, the board will be revamped to give representation to the US firm.
Who will head Flipkart after the Walmart deal?
- Walmart’s Krish Iyer will be the CEO of the company, according to agency reports. The company will continue to be based out of Bengaluru.
What about Flipkart’s founders, are they staying onboard?
- Binny Bansal, who co-founded Flipkart with Sachin Bansal 11 years ago, will retain his 5.5 per cent stake in the company and will be chairman of the company’s board, according to news agencies.
- Sachin is exiting the Bengaluru-based company post the Walmart deal. According to his Facebook post, he plans to catch up on gaming and brush up his coding skills as he takes time off to finish few pending personal projects.
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