Walmart, which is the largest retailer in US, has acquired India’s biggest e-retailer Flipkart on Wednesday for a behemoth $16 billion, making it the world’s largest e-commerce deal. Walmart has acquired 77% stake in Bengaluru-based online shopping portal for a valuation of around $21 billion. Earlier, a figure closer to 70 per cent was being bandied about.
Walmart, while signing the deal, stated that the remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
Doug McMillon, Walmart’s president and chief executive officer said, “We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners. We are confident this group will provide Flipkart with enhanced strategic and competitive advantage.”
Binny Bansal, Flipkart’s co-founder and group chief executive office said, “This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India.”
The investors who are retained together hold 37.7% in Flipkart. Post transaction, their holding may decline however they will still have a bite of the Bengaluru-based online portal.
Currently, Tiger Global is second highest stake holder in Flipkart with 20.5% stake, whereas Tencent and Microsoft have 6% stake each in the company. The founder and CEO Binny Bansal of Flipkart owns 5.2% in Flipkart.
Here’s who will sell their stake to Walmart.
SoftBank, which owns the highest stake of 23.62% in Flipkart, will be exiting the company, while Naspers the third largest investor has 14.57% stake.
Softbank, Tiger and Naspers together hold 58.69% stake in Flipkart.
There are other investors who give their holding away to Walmart are – Accel India with 6.4%, eBay with 6% stake and others 6.21% stake.
These other investors are – Greenoaks Capital, Morgan Stanley, QIA, Morgan Stanley Investment Management, Steadview Capital, Dragoneer Investment Group, Axis Bank, T.Rowe Rice and Baillie Gifford.
Among investors will also be Sachin Bhansal the founder and CEO of Flipkart for nine years. He will exit Flipkart by selling 5.5% stake to Walmart.
With the investment, Flipkart will leverage Walmart’s omni-channel retail expertise, grocery and general merchandise supply-chain knowledge and financial strength, while Flipkart’s talent, technology, customer insights and agile and innovative culture will benefit Walmart in India and across the globe.