It is officially declared that Flipkart recently sold their 77% stake to Walmart and the news was released on May 09. It is considered to be the biggest acquisition till date accounting for about $ 16 billion (1 lakh crores) said Walmart during time of the release.
Walmart’s president and chief-executive officer, Doug McMillon said that,” India is one of the most relevant workplace in the world. It has alluring retail markets where business goes to productive more”. He elaborates its size and growth rate and their investments is a chance to get a partner who leads in the e-commerce marketplace. Various lucrative deals and offers are carried out during Flipkart sale to attract more customers and ensure benefits. He added, “We have several plans to execute by working with Flipkart and look forward to its outcomes in this critical market.”
In a recent survey, it is reported that, the investors of Flipkart, Softbank Group Corp is holding out for the better price and will exit. Softbank holds the majority stakeholder of Flipkart with 23.62%. Whereas Tiger Global, which is a New-York based investment firm has 20.5% of ownership. On the other hand, Naspers (14.57%), Accel India (6.4%), EBay (6%), Ten cent (6%), Microsoft (6), Sachin Bansal (5.5%), Binny Bansal (5.2%) and others has (6.21%) stakeholders with Flipkart as of December 2017. According to ET, those stakeholders may sell some of it and Softbank seeking for the estimated price $15-17 billion through the secondary sales.
Tax department has also figured out the whole scenario and government assumes to get more tax. The started working till the release of this deal and Flipkart responded by IT department which has the deep details of e-tailers. IT department closely work on the officials of tax departments expected that overall tax liability depends on the deal and the timeline of Softbank quit. Tax arena issue and the foremost decision is out when Softbank Exits.
Apart from this, Global E-commerce giant Amazon striving hard to offered “breakup fee” of between $1 billion to $2 billion to take over the deal. But Walmart successes to seal the deal and fights back to its global rival Amazon Indian e-commerce market which is uplifted over 13 times to $ 200 billion by the year of 2026. The E-mails were ignored and did not precede any statements on ongoing process, according to the Softbank spokesperson.
The founders of Flipkart, Sachin Bansal and Binny Bansal who owns the company from 11 years could be exiting the company and sell its stakes which is about 6 % but yet is not independently confirmed. On the other hand Softbank invested USD $2.5 billion on Flipkart in august 2017. This investment is to make profit at first hand with USD $2 billion after the exit from Flipkart. Rival Snapdeal was forcibly pushed Flipkart to merge with them but somehow it was not happened and the owners of the Snapdeal fell apart and against to this deal. The Japanese conglomerate was not invested in Snapdeal. Thereafter, Softbank invested in Flipkart in 2017.
The Flipkart deal contains primary and secondary shares. According to the sources, CCI (Competition Commission of India) taking risks to share competitive data part of the diligence were causes for Flipkart investors. Also management wants to deal with Walmart because for the future profits not Amazon. The rivals are already at its peak.
The fiscal year finished on March 31, Walmart said, Flipkart had fixed salaries worth of $ 4.6 billion, which is much higher than the previous ratio. In a recent survey, it is reported that the GMV (Gross Merchandise Value) of goods are relevantly huge, which was $ 7.5 billion during the period.
When the deal was signed, Binny Bansal, Flipkart’s group Chief Executive Officer shared their opinion with media, this deal makes a great profit to India and connections will be much stronger than before. Also we can create next wave of retail in India. Now onwards, Walmart become the deal partner of Flipkart and their business journey starts and rivals are more aware than before because the competition high in retail market.
Softbank has $ 100 billion vision and they invested $2.5 billion in Flipkart. It is believed that Tokyo headquarter investors purchase the share which is about $ 10-12 billion valuation. The final stage of the transaction is still being worked on and may or may not change it. At the time of investment, Tiger Global got $ 424 million and Accel got $ 110 million and after a sudden they exeunt from the company. According to Mohit Gulati, an investor says that Softbank holds 23.6 percent share in a present time. It depends on then to leave partially or completely exits. Softbank negotiating with Walmart to make an exit because to pay the relevant tax. Legal expert requesting anonymity said that, Walmart agreed with this discussion at the time of actual exit. Walmart agrees with the statement of Softbank is the key investor in Flipkart and that is the reason to pay USD $16 billion to buy the 77% of stakes.