The Big Buyout
May 10, 2018, brought a wave of joy, excitement, and buzz for a little Bengaluru based company named Flipkart maybe you have heard about them somewhere. The news of a $16 billion acquisition of the e-commerce brand by Walmart, world's biggest retailer, echoed all over India. This deal solidified the stance of Walmart in India by becoming the country's largest acquisition deal and also the world's largest purchase of an e-commerce company. That is quite a statement and a signal of the intent of doing business in the country. The procedure, talks, and delegations of over 20 months finally came to fruition with Walmart now a 77% (majority) shareholder in the company. Venture capitalists and private equity professionals certainly seem to be happy by the acquisition since put together, these individuals are all set to be richer by $14 billion which is not a small amount by anyway, shape or form. However, even after all the financial investments by Walmart, they could have potentially grossly underpaid for acquiring Flipkart with the endless opportunities the Indian marketplace has to offer.
Walmart "Stole" the show?
Let's take a step back and say that compared to the everyday man, this deal is huge and involves a lot of money being thrown around by Walmart in the process making many Investors and shareholders extremely happy. However, in the grand scheme of things, the potential this acquisition presents for Walmart could quite literally make them feel like they invested no money in the company. Let's look at some facts of the business dealings of Flipkart in India.
Thus, the future prospects for Walmart-Flipkart are looking very bright. With a combined effort they could look towards dominating the Indian markets in e-commerce. Binny Bansal, Flipkart's Group Chief Executive is also confident about the acquisition and refuted claims that Walmart paid in excess for Flipkart and added that the move comes as a "long-term bet on India". Binny also says that it will be clear in the next 5-10 years that Walmart has landed themselves an absolute bargain with the acquisition. Binny has also mad a bold claim that "Flipkart was the only viable option for Walmart". He could be true as the process of company registration, setting up a network in the country and being in compliance with GST registration and GST return rules could have proven to be a hurdle for Walmart had they not acquired Flipkart
Impacts of the Acquisition
Walmart acquiring Flipkart is going to change the e-commerce and retail landscape in India drastically. A small company which started as a book delivery service started by two ex-employees of Amazon(how ironic!) Flipkart, is set to maintain it's identity and its culture according to the CEO of Walmart. However, they will now have the expertise of supply chain management of the world's biggest retailer behind them. It looks like things are looking up for Flipkart, at the very least.
The economy, the e-commerce landscape, local traders, everyone is going to be affected by this huge shift. In a quest to catch up with rivals Amazon and expand their business globally, Walmart has been very persistent with the acquisition. Let's look at some of the impacts of the acquisition on the country.