The deal that valued Flipkart at Dollars 20.8 billion was of the biggest deals in the e-commerce space, and created a pool of wealth for its employees. This deal means that the war on pricing and discounting is set to continue.
"Walmart will pay approximately $16 billion for an initial stake of approximately 77 percent in Flipkart, formally Flipkart Private Limited". "Over time in India, there will be a more competitive environment".
However it may want to portray the purchase, writes Bloomberg Opinion columnist Mihir Sharma, "the truth is that the deal represents a second-best outcome - if that - for Walmart as well as for Indian consumers and farmers". There will be an uneven level playing field to the disadvantage of retail traders. Shah also reiterated that considering that the average age of most professionals is below 40, they could consider starting their own businesses or back startups or start their own VCs, deploying the balance money make "risk-adjusted returns" to maintain their lifestyle. "While e-commerce is still a relatively small part of retail in India, we see great potential to grow".
Closing is expected later this calendar year, subject to regulatory approval.
It's said that both companies will operate distinctively in the country.
The fact that most of it was already owned by foreign companies or that it is domiciled in Singapore didn't stop people from feeling pride about this Indian firm that had grown so quickly.
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"We believe that some e-commerce companies in India have not been adhering to the guidelines issued under the Press Note three of the FDI Policy for marketplaces". "Over the last 11 years, Flipkart has grown to be one of the most recognized brands and the No 1 e-commerce platform in India".
The deal probably will not do much to change market share between Flipkart and Amazon in India, said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group.
"Flipkart's scale of business will grow immensely post the deal with Walmart as the United States retailer has deep pockets and better experience in handling global market", said Nrusingha Charan Barik, who is in charge of the delivery partner of Flipkart in Odisha. Upon closing the deal, Flipkart's financials will be reported as part of Walmart's worldwide business segment.
New York-based investment firm Tiger Global is to reap profits of $3 billion on a total investment of about $1 billion.
The factor daily report quotes that, "With the cash component to be close to 55% it will cause the exit of some of the investors in Flipkart". The acquisition was first announced by investor Softbank's CEO and founder Masayoshi Son followed by an official statement from Walmart. Over and above, it includes invested shares worth $2 billion, approx.
In the blog, Accel's partners admitted that they were way off in their original assumption was Flipkart would require around $500 million in additional capital to reach break-even, despite realising that the company would need to be financed in an unprecedented fashion.