Major stake of Flipkart sold to Walmart

Major stake of Flipkart sold to Walmart

RSS-affiliate Swadeshi Jagran Manch on Wednesday objected to U.S. global retail giant Walmart's bid for "backdoor, barge entry into India through the proposed e-commerce route by buying controlling shares in Flipkart".

The deal, under which co-founder Sachin Bansal and Japans Softbank Corp Group are exiting, values Flipkart at United States dollars 20.8 billion.

Walmart for its part is promising to provide hundreds of jobs in India, work with kirana owners to modernize their practices, support small businesses, join hands with farmers, and lend a hand to Make in India projects.

Last year, Flipkart group raised $1.4 billion from global technology majors eBay, Tencent and Microsoft.

Lee also expects the competition getting aggressive as Amazon counter-offered Walmart for a stake in Flipkart. And even beyond the immediate payoffs, Walmart's growth in India through Flipkart should accelerate for years.

"Flipkart will diversify its inventory to attract more Indian consumer segments that haven't started shopping online", said Lee. Flipkart co-founder Binny Bansal and other shareholders will hold the remainder.

"This may seem like a one-off acquisition in a faraway land, but Indian e-commerce is without a doubt going to be a focus for Walmart. We wish the team well as they continue their journey", Rippel said in a statement. Flipkart co-founder Sachin Bansal chose to leave the startup he co-founded with Binny Bansal in 2007.

Walmart's foray into India's online retail space sets the stage for an American business war against Inc in the world's fifth largest economy.

There's also the government to consider, as the contract is subject to regulatory approval. "The sale of ASDA in the United Kingdom also meant that Walmart needed to identify a new growth avenue - and long frustrated by the byzantine laws governing foreign investment in Indian retail, growing via bricks and mortar retail would have been too complex and slow".

Jared Wiesel, partner at the tech-enabled consulting firm Revenue Analytics, said Walmart - which has traditionally operated physical stores - would also benefit from Flipkart's technological expertise. It could potentially use those Best Price stores as pickup and delivery points.

Walmart said on Wednesday it reached a $16 billion deal to buy a majority stake in Flipkart, India's leading e-commerce platform, in a sizable bet on a vibrant but risky new market. But in groceries, Walmart-owned Flipkart is still a fringe player.

Flipkart's stock options are granted over a four-year period, with employees allowed to vest them every month after a one-year threshold.

Arguably, the Flipkart deal is the most significant acquisition in the history of Walmart and one that was pushed by its chairman Greg Penner, heir to the multi-billion-dollar Walton family fortune. Amazon needs to succeed in another high-growth market to prove it can effectively replicate its model beyond North America, and it has been aggressively expanding in India. Last year, according to figures released by Forrester, the online retail market in the country grossed up US$21 billion. This deal is a mechanism through which Walmart wants to control and dominate offline retail trade.

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