Flipkart finally ended a long on-going saga of its takeover as it finally announced that the acquisition deal involving Wal-Mart Inc. was completed last week. This marks one of the largest deals in the e-commerce segment in the country.
Wal-Mart officially takes over Flipkart:
While the deal was in the offing for quite a while, there was no official confirmation from either company. Now finally, both the organizations have come out and formally announced the acquisition deal. This deal now makes Wal-Mart Inc. the largest stakeholder in the e-commerce giant.
The deal was originally announced in May with Wal-Mart confirming that it would be acquiring a 77% stake in Flipkart. It confirmed that the partnership would be used to leverage both company’s synergies with Wal-Mart providing its insights on market strategies and global supply chain management and Flipkart providing its considerable target market that it has built in the country.
Wal-Mart is looking to scale its operations in India, as it now only has a limited set of stores in smaller cities. It is looking for reliable partners to create a sustained economic growth in various sectors that include food, agro and retail spaces. The investment that the company is looking to make in the country will directly support national initiatives that will help create a sustainable growth in enabling job creation, supply chain development, support for small businesses as well as reducing food waste across the country.
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Flipkart’s role in the business:
With the acquisition, however, Flipkart isn’t set to exit the business as the new entity has emphasized that it would like to retain its top management to run the organization. The other organizations that will be represented on the board with include Tiger Global Management LLC and Tencent Holdings Limited. Apart from these independent members from Wal-Mart will also be joining the board. The remaining 23% of the company will be held between Tencent Corp, Microsoft, Tiger Global and the company’s founder Binny Bansal.
Flipkart’s financials will now be reported as a part of Wal-Mart’s Global Business segment. However, both the companies will retain their identities and operations separately when dealing in the country, as they will be operating in different market segments respectively.
Comments from the top management:
Both the companies were clearly satisfied with the deal as evident from their statements. Flipkart can now leverage Wal-Mart’s superior expertise in managing its supply chain and expand its brand presence in a bid to take on Amazon in India and Wal-Mart will now be able to make significant inroads into the Indian e-commerce market, as it has made little to no impact in the supermarket industry in the country on account of several political and regulatory issues.
WalMart’s CEO and President, Judith McKenna said “Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart. Our investment will benefit India by providing quality, affordable goods for customers while creating new skilled jobs and opportunities for suppliers.”
He also added that “As a company, we are transforming globally to make life even easier for customers, and we are delighted to learn from, contribute to and work with Flipkart to grow in India, one of the fastest-growing and most attractive retail markets in the world.”
Flipkart’s co-founder, Binny Bansal said “We are poised and ready to deliver the full value of this partnership for India. By combining Walmart’s omni channel retail expertise, supply-chain knowledge and financial strength with Flipkart’s talent, technology and local insights, we are confident that together we can drive the next wave of retail in India.”
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