Walmart buys 77% equity stake in Flipkart for $16 bn


The Walmart-Flipkart deal may become a blessing in disguise as almost hundreds of current and former employees of Indian e-commerce giant are set to turn into dollar millionaires overnight. This deal means that the war on pricing and discounting is set to continue. The acquisition will value Flipkart at almost $21 billion.

Meanwhile, Amazon is also still fighting hard in India, with founder Jeff Bezos crowing last month that had the most-downloaded shopping app in India for 2017. There will be an uneven level playing field to the disadvantage of retail traders.

Earlier in the day, a protest was staged by the Swadeshi Jagaran Manch, the economic wing of the Rashtriya Swayamsevak Sangh (RSS) against Walmart's acquisition of majority stake in Flipkart.

Companies like Flipkart and Amazon operate as e-commerce marketplaces Ä a segment where 100 per cent foreign direct investment (FDI) is allowed.

"After assessing the deal, we will either represent to government or to the Competition Commission, or we will go to court", he added.

Irrespective of which e-tailer ultimately comes out on top in India, the more important topic relates to the future role of air freight when it comes to domestic and cross-border e-commerce supply chains and fulfillment in the country. Then, the e-commerce company launched logistics arm Ekart.

Upon completion of the transaction, Walmart will work closely with the remaining shareholders in Flipkart that include Tencent Holdings and Microsoft, who will be able to provide key strategic and technological insight for the company moving forward.

RSS affiliate Swadeshi Jagran Manch has alleged that U.S. retail giant Walmart was "circumventing" rules for a "back-door entry" into India with its U.S. $16 billion majority stake acquisition of Flipkart and sought Prime Minister Narendra Modi's intervention to safeguard "national interest". They are selling their shares in a Singapore-based company - Flipkart Pte Ltd, which owns an Indian company - to a non-resident (US) company, Walmart. Although this deal will also be a test of India's tax laws, since Flipkart is actually based in Singapore, but given that the underlying asset is based in India, Flipkart's founders and investors will have to pay Capital Gains Tax in the country to avoid a repeat of the Vodafone-Hutchinson case. Group CEO Masayoshi Son on Wednesday announced SoftBank will sell its 20% in Flipkart for $4billion, making a profit of 1.5 times on the $2.5 it invested in the company.

For most employees, the larger question is how this acquisition is going to settle things down in Flipkart.

Walmart's expansion in the online retail space in India comes after Amazon CEO Jeff Bezos has committed to investing $5 billion in the firm's Indian unit and as Paytm Mall, backed by China's Alibaba, is steadily expanding its operations. Alibaba, meanwhile, acquired online grocery retailer BigBasket this year, and has earmarked funds for other investments in India.