US retail giant Walmart will be announcing the acquisition of Indian e-commerce player Flipkart today. This will be one of the biggest bet of Walmart in the country with Walmart buying about 70 per cent stake in Flipkart. This deal is expected to value Flipkart at $18 billion to $20 billion and the retailer’s chief executive Doug McMillon is expected to outline the India strategy for Flipkart’s employees. This would be the biggest ever e-commerce acquisition in the world and will place Walmart against rival Amazon in one of the fastest growing markets of the world.
Apart from creating back end infrastructure to boost the farm sector in India, Walmart will retain the Indian management led by co-founder Binny Bansal.
Flipkart’s co-founder and CEO for nine years, Sachin Bansal will exit the company by selling his entire 5.5 per cent stake to Walmart.
Sources mention that Binny Bansal will stay on the group as CEO and will be appointed as the executive chairman of the Bengaluru based e-tailer.
SoftBank and Naspers are expected to sell out completely and early investors like Accel Partners and Tiger Global will retain a small shareholding with Tencent.
There will be huge investment in technology in digital payments front as well as other areas.
Walmart India owns and operates a total of 21 stores under the cash-and-carry system in nine states across India.
Walmart’s plan includes broadening its online presence in the country and linking it up with 5-6 million kirana stores in order to help them modernize and be a part of the supply chain.
It is expected that Walmart will bring its managerial expertise but the existing leadership in Flipkart will stay since they understand the market well.
Walmart has a global sourcing centre in Bengaluru and a technology center which employs 1200 engineers. The sourcing center in Bengaluru procures non-food products from the domestic companies for more than a dozen global markets.
Analysts expect a huge chunk of fresh investment in strengthening the back end infrastructure of the company. With this deal, Walmart will be able to extend its expertise in managing goods in the digital space.
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