Flipkart-Walmart deal: 10 things you should know

作者:SHARON 日期:2018-05-12 標籤: 分類:閱讀:42

Walmart’s acquisition of India's home-grown e-commerce firm Flipkart for USD 16 billion has put a lot of rumours to rest. After much anticipation from all quarters, the companies eventually announced the deal at around 4.30 pm on Wednesday.

Here is are 10 things that you should know about the landmark deal:

After the deal, Walmart Inc will become the largest shareholder in Flipkart Group with 77% share, giving a clean exit to its former largest shareholder – Japan’s SoftBank.
Flipkart’s co-founder Sachin Bansal is also exiting the company by selling his entire 5.5 percent stake, leaving his partner Binny Bansal at the helm of the acquired company.
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.
Flipkart had a long-standing plan of going public with an IPO by 2019-20, an ambition that Walmart is supporting. However, the company has provided no formal timeline when Flipkart will be listed publically.
Flipkart's supply chain arm, eKart, serves more than 800 cities, making 500,000 deliveries daily. In the fiscal year ended March 31, Flipkart recorded GMV of USD 7.5 billion and net sales of USD4.6 billion representing more than 50% year-over-year growth in both cases.
Walmart says that with this 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 innovative culture will benefit Walmart in India and across the globe.
While Walmart and Flipkart will leverage the combined strengths of both companies, they will maintain distinct brands and operating structures.
Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfilment centre in 19 cities across nine states in India, with more than 95 percent of sourcing coming from India, aiding suppliers, creating skilled jobs and contributing to local economies across the country. Walmart has been operating in India for last 20 years, first in a JV with Bharti Enterprises, and then standalone as wholesale cash & carry business. Walmart currently sources nearly USD 3 billion worth of goods for its international stores from Indian firms.
Walmart's investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future. Walmart and Flipkart are also in discussions with additional potential investors who may join the round, which could result in Walmart's investment stake moving lower after the transaction is complete.
If the transaction were to close at the end of the second quarter of this fiscal year, Walmart expects a negative impact to FY19 EPS of approximately $0.25 to $0.30, which includes incremental interest expense related to the investment.



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