Grabbing all eyes of corporate biggies and freshers, the Flipkart-Walmart deal is a juggernaut deal to watch out for. In the wake of the big deal, already invested Softbank is rumored to be offloading their stake from the etailer giant Flipkart.
Walmart will become the significant shareholder of Flipkart. It will own 80 percent ownership to the company, pegged at a total of about USD 20 billion. This is how it is expected to work out: While Alphabet will acquire a 15 percent stake in the online marketplace for about USD 3 billion, Arkansas-based Walmart will acquire about a 60 percent stake in Flipkart, on the board of which Walmart might get three board seats. With the Walmart on board, the group will be heading finance, legal and compliance heads.
This step will establish a very strong competitive relationship between Amazon and Flipkart. The deal will bolster international trade of merchandise. With the growing Indian market, the deal will prove to be a win-win for both the customers, shareholders and the company. According to Morgan Stanley estimate, the Indian e-commerce market is expected to grow to USD 200 billion by 2026. Out of the total e-commerce arena, Amazon and Flipkart are the top players amongst all others like Snapdeal, Koovs, etc.
While Amazon is rumored to have offered a valuation of about USD 22 billion along with a break-up fee of USD 2 billion, Walmart offered USD 18-20 billion valuations. As per last year’s valuation, Flipkart is valued at about USD 12 billion.
There is no denying that this will be the largest M&A deal in India. Walmart chief executive Doug McMillon is expected to arrive in Bengaluru to have the final word and announce the deal officially at a town hall meeting.
Officially known as the first billion-dollar Indian e-commerce company, Flipkart sells 8 million products across 80 plus categories. It has 100 million registered users, 100,000 sellers, 21 warehouses, 10 million daily page visits.