Amazon already is the No. 2 online retail player in India, and regulators might frown on a combination with Flipkart - a situation that may have swayed Flipkart's board in the direction of a deal with Walmart. This is because Walmart will provide Flipkart with the necessary financial muscle as well as retailing expertise in various areas including marketing and logistics.
Many analysts see it is a Flipkart's well-calculated strategy to take on Amazon by investing in these companies. The bank had acquired the shares from Flipkart via investment fund. Walmart will pay the bank approximately $20 billion.
Also voicing a strong objection to the proposed Walmart-Flipkart deal is the RSS-affiliated trade body Swadeshi Jagran Manch (SJM).
The wait for Walmart - Flipkart deal is getting longer by the day. The deal will likely value the e-commerce platform at United States dollars 20 billion. Flipkart under the new order is likely to be listed as a Walmart subsidiary in India in 2019-20, similar to its model in Mexico.
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The latest development on the speculated exit to be made by Sachin Bansal suggests on how much the founder must have planned to make a move such as this one as he is planning to sell his 5.5% stake in the company for almost $1 Bn.
For Flipkart, the deal would give it additional capital and retail muscle to fight Amazon. Citing sources, the report added that these investors might have the option of selling their stake to the brick-and-mortar behemoth at a later date at the same valuation as the current deal on the table.
Japan's SoftBank Group which owns roughly a fifth of Flipkart through its Vision Fund, is expected to completely exit, Reuters has previously reported. But apart from one co-founder's exit, nothing much is expected to change at the top management. Walmart CEO Doug McMillion is expected to fly to India this week to officially announce the takover. Tiger Global, whose Partner Lee Fixel has been at the forefront of the negotiations, might retain a nominal stake in the company along with Accel Partners, the earliest investor in Flipkart, and other more recent investors like Tencent and eBay. When IIT Delhi batchmates Sachin Bansal and Binny Bansal set out to launch the e-commerce portal in 2007, little did they dream that their company would be up for sale at a valuation of $20 crore (Rs 1.34 lakh crore) in a little over ten years.