NEW DELHI, MAY 09
US retail giant Walmart is acquiring India’s largest e-commerce player Flipkart and the deal was sealed on Tuesday night (Japan time), when it would have been afternoon in India, SoftBank CEO (Chief Executive Officer) Masayoshi Son confirmed on Wednesday. An official announcement from Flipkart and Walmart is expected later in the day. Before the deal, SoftBank was the largest investor in the Flipkart with around 23 per cent stake in the Bengaluru-based company.
“Last night, (they) reached a final agreement and it was decided that Flipkart will be sold to America’s Walmart,” Son said while announcing SoftBank’s quarterly results.
Japan’s SoftBank Group Corp and Tiger Global Management are said to be selling off their entire stake in Flipkart.
According to analysts, the deal is the world’s biggest-ever e-commerce acquisition and would pit Walmart head-to-head against Amazon in one of the world’s fastest growing markets. As the e-commerce battle in India hots up even further with this latest development, Amazon in the meantime, has pumped Rs 2,600 crore into its main India unit — Amazon Seller Services — taking the total capital infusion into the entity to over Rs 10,750 crore in a little over a year.
E-commerce sales in India hit $21 billion last year, according to market research company Forrester and are expected to soar as more people make greater use of internet access.
Flipkart sells everything from mobile phones, television sets, juicers to running shoes, sofas and beauty products. Amazon too has a similar range of product offering.
Walmart CEO Doug McMillon arrived in Bengaluru to make the announcement of the deal. The US retail giant is likely to bring its managerial expertise, although the existing leadership in Flipkart is expected to stay as they “understand the market well”. Currently, Walmart India owns and operates 21 stores under the cash-and-carry system in nine states across the country.
There had been months of speculation that Walmart was preparing to buy Flipkart but both had repeatedly declined to comment on the talks.
Japan’s SoftBank is currently the largest investor in Flipkart with a 23-24 per cent stake, along with early backer South African media and internet giant Naspers, which holds 13 per cent. Other investors include New York-based hedge fund Tiger Global, US private-equity firm Accel Partners, China’s Tencent Holdings Ltd, eBay Inc and Microsoft Corp.
In terms of financial statistics, Flipkart Group’s consolidated loss attributable to owners of the company in fiscal 2017 widened to Rs 8,770 crore, from Rs 5,216 crore a year earlier. Consolidated revenue jumped 29 per cent to Rs 19,855 crore in fiscal 2017.
Flipkart was founded 11 years ago in 2007 by IITians Sachin Bansal and Binny Bansal from a two-bedroom apartment in Bengaluru’s Koramangala area as an online bookstore. Although they share the same last name and come from Chandigarh, the two Bansals are not related. A batch apart in IIT-Delhi, they became friends while working together at Amazon and decided to start Flipkart.
NEW DELHI, MAY 09