Markets

Walmart Rushes Into India, Pays $16 Billion For Flipkart

Walmart Rushes Into India, Pays $16 Billion For Flipkart

Hogan Lovells M&A partners Richard "Rick" Climan and Christopher Moore in Silicon Valley are advising Walmart on the largest e-commerce deal in its history, along with Singapore managing partner Stephanie Keen.

But analysts have always been sceptical about Walmart's ability to integrate these acquisitions into an integrated online retail strategy.

Opposing the Walmart-Flipkart deal, RSS affiliate Swadeshi Jagran Manch said in a letter to Prime Minister Narendra Modi that Walmart was using the e-commerce route to circumvent the rules to attack the Indian market.

U.S. retail giant Walmart has signed a definitive agreement to acquire a 77 per cent stake in India's largest e-commerce marketplace Flipkart with an investment of around $16 billion, making it the largest transaction in history of the online retail space globally. The deal, capping nearly two years of talks, will help the Bentonville, Arkansas-based retailer fortify and boost market share against Amazon.com, which reportedly had tried to make a competing offer for a stake.

On the other hand, Retailers Association of India while staying away from commenting directly on the acquisition, said some e-commerce companies in India have been flouting FDI Policy for marketplaces.

"We will not know for five to 10 years whether this transaction is successful strategically or financially", said Steven Roorda, portfolio manager with Minnesota-based Stonebridge Capital Advisors.

The blockbuster takeover, which is also Walmart's most expensive acquisition, threatens a major blow to rival Amazon's lofty ambitions in India. "However, to remain the number one player in India (Amazon coming a close second after just four years in India), they are looking to expand beyond smartphones and fashion". 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.

Moscow hosts Victory Day parade
The ruling and the ultra-nationalist LDPR party backed Medvedev, while the Communist and Just said they opposed his candidacy. Putin has effectively been the leader of Russian Federation for all of the 21st century.

Flipkart co-founders Sachin Bansal (left) and Binny Bansal.

Flipkart is India's largest e-commerce group on the basis of sales but has been fighting off a huge challenge from Amazon. For retail giants, India presents an opportunity to explore things they know little of.

Walmart will offer a 100% buyback of vested shares by Flipkart employees, ET Now reported, citing sources. The wheeling and dealing show how McMillon is focusing on high-potential markets like China and India, finding partners to help it battle online and cutting loose middling businesses.

In an investors' call later, Walmart Chief Executive Doug McMillon said India was a priority market for the retail behemoth as the country was the largest and fastest growing economy.

Walmart investment, he said, will benefit India by providing quality, affordable goods for customers, while creating new skilled jobs and fresh opportunities for small suppliers, farmers, and women entrepreneurs. In less than a year, the company is now seeking to sell its Flipkart stake for $1.1 billion.

But in the holiday quarter, US online sales growth slowed considerably and the company said it would shift some resources away from jet.com to walmart.com, a disappointing turn of events that could help explain investors' anxiety about the Flipkart news.


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