For $16 bn Walmart bags Flipkart

Not an easy path

It also expects Indian investments to shave 60 cents per share from earnings in fiscal 2020. And, in case of Flipkart, as the deal is very complex, chances are that it might get challenged in the Supreme Court of India.

With 54 million active users across Flipkart's various platforms, and some $7.5 billion in annual gross merchandise volume (GMV), it's clear why Walmart saw Flipkart as an attractive target to build market share in India. One analysis points out that on investments of $15 billion in the online retailing space, India's e-commerce market has thrown up online retail sales of roughly the same figure.

Soon after the deal was announced yesterday, RSS-affiliate Swadeshi Jagran Manch alleged that Walmart was "circumventing" rules for a "back-door entry" into India and sought Prime Minister's intervention to safeguard "national interest". Upon closing, Flipkart's financials will be reported as part of Walmart's global business segment.

Accusing the Narendra Modi government of "naked betrayal" of all promises made by it on the issue of FDI in multi-brand retail sector over the proposed takeover of Flipkart by U.S. retail giant Walmart, CPI (M) said on Thursday that "Make in India has now become Make for India".

As it turned out, the rise of heavily-financed competitors such as SoftBank-backed Snapdeal, Alibaba-backed Paytm and Amazon put paid to any such hopes of a quick road to profitability for Flipkart. "It is really about grabbing an opportunity after waiting on the sidelines in a growth market for over a decade", he said. That includes its decision last month to sell its British unit, Asda, which primarily operated a chain of traditional supermarkets.

Global business contributed less than a quarter to the retailer's total revenue of $500 billion (roughly Rs. 33.6 lakh crores) in fiscal 2018. "The corporate image of Flipkart will see a rise in customer expectation and given Walmart's history and record customer requirements shall be taken care of". The deal also calls for Walmart to invest $2bn in equity funding into Flipkart.

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Stoeckle and other investors were encouraged when Walmart's finance chief, Brett Biggs, said in October that he's "open to taking action" to simplify operations. This could lower its stake although Walmart plans to retain majority control. Now, the company says that it has notified Flipkart of its intentions to sell its equity holdings in Flipkart, which eBay estimates to be 1.1 billion United States dollars in value.

McMillon said Flipkart group would continue to operate as a separate board-managed company with co-founder Binny Bansal as the CEO.

Sachin Bansal, the co-founder of Flipkart will exit the company completely by selling his entire stake of 5.5%. Rs. 13,455 crore. This establishes a fact that ESOPs held by about 100 employees of Flipkart is now estimated to be worth more than $1million.

When Walmart paid $3.3bn in 2016 to buy Jet.com, the USA retail giant turned to an outside legal team led by Fenwick & West and Gibson Dunn & Crutcher. Walmart's long-term corporate credit rating was affirmed at "AA", S&P said.

Update 20:03: Cyril Amarchand Mangaldas will be advising Flipkart going forward on the required competition law filings and other related aspects, led by Mumbai-based managing partner Cyril Shroff and competition partner Bharat Budholia, according to a firm spokesperson. "We will not know for five to 10 years whether this transaction is successful strategically or financially".

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