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CAIT might approach CCI over Walmart-Flipkart deal

11 May, 2018, 01:37 | Author: Kristen Ingram
  • Not an easy path

"The Flipkart-Walmart deal will surely inspire young and budding entrepreneurs in our state as these two companies are truly global brands", said Debasish Patnaik, a prominent businessman in Odisha.

Sachin Bansal's decision to exit Flipkart after its takeover by Warlmart was a "very emotional moment", said the company's co-founder Binny at a select media briefing today. Walmart has revealed it will pay $16bn for a 77 percent stake in the Indian e-retailer. That's a fraction of Walmart's latest annual revenue of $485.8 billion.

The IT department has also asked Flipkart about details of the Dollars 16 billion (Rs 1.05 lakh crore) deal. With this deal being hammered down, the total worth of Flipkart's employee stock ownership plans (ESOPs) has jacked up.

Tiger Global: More than any other fund, the elite and low-profile NY investment vehicle Tiger Global bet aggressively on Flipkart and it's paid off.

Amazon was also said to have put in an aggressive offer to buy 60 per cent of Flipkart but the board of the Indian firm is said to have favoured the Walmart offer.

But some traders in India are opposed to the deal, fearing its effect on competition.

To finance the investment, Walmart intends to use a combination of newly issued debt and cash on hand. Gunderson Dettmer LLP, Khaitan & Co., Allen & Gledhill LLP and Dentons Rodyk & Davidson LLP provided legal counsel to Flipkart. If the transaction were to close at the end of the second quarter of this fiscal year, Walmart expects a negative impact to its FY19 EPS (earnings per share) of approximately $0.25 to $0.30, which includes incremental interest expense related to the investment.

"Flipkart's scale of business will grow immensely post the deal with Walmart as the USA retailer has deep pockets and better experience in handling global market", said Nrusingha Charan Barik, who is in charge of the delivery partner of Flipkart in Odisha. This had helped sellers on Flipkart's platform in their global sales. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. "We were a group of 8 friends from IIT Delhi and we used to hang out together all the time and we were best of friends", said Binny recalling the Flipkart journey.

"I'll be watching and cheering from the outside - Flipsters, you better continue to do a good job!" he said.

Sachin Bansal said he will be "cheering from the outside" and urged Flipkart team to continue with the momentum.

The bigger story, consequently, is what will happen to the grass underneath the Indian retail sector, both offline and online, when the two big elephants, Walmart and Amazon, battle it out for control of the growing Indian market.

Analysts believe more than 500 million Indians will be online by the end of 2018 - Flipkart said that its delivery business, eKart, serves more than 800 Indian cities and makes some 500,000 deliveries every day.

Sources say that Sachin does not agree with Walmart's proposed strategy and operating structure after the deal is over.

On taxation, Walmart CEO said the company is working with all of the investors to ensure they are more compliant.

Its first investment in Flipkart came at a time when the Bengaluru-based startup was struggling to raise money.



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