Walmart closes in on $15bn Flipkart e-commerce deal


The deal will value Flipkart at $20 billion. It's time for policymakers to put on their thinking caps and study this Walmart-Alphabet takeover of Flipkart.

"Flipkart is key to a global e-commerce strategy", said Arvind Singhal, chairman of the New Delhi-based retail consultancy Technopak Advisors.

Amazon had invested Rs 81.5 billion into its marketplace unit across four rounds in the financial year 2017-18. Alphabet, Google's parent company, will get roughly 15 percent stake of about 3 billion USA dollars.

The $15-billion buyout of e-commerce player Flipkart by USA retail giant Walmart is likely to attract capital gains tax under Indian laws, similar to the tax imposed on Vodafone, even though the entities are headquartered overseas. Son's Vision Fund paid $2.5 billion for the stake in the Singapore registered firm that primarily operates in the Indian e-commerce market. There will be fresh capital infusion of over $2 billion, and tech giant Google will come aboard as an investor. Flipkart, Alphabet, Tiger Global and Accel did not immediately respond to requests for comment.

Krishnamurthy and Binny Bansal will remain in their current roles after the deal, the two sources said. In 2013, it called off its joint venture with Bharti Enterprises, buying out Bharti's 50 per cent stake in the wholesale cash and carry business, while Bharti continued to run the front-end retail business EasyDay on its own. Binny Bansal will keep his board seat and partially sell his stake, the report added.

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But, so far, only Flipkart's board has approved the offer from Walmart and the deal is expected to close in the next 10 days as they await regulatory approval (meaning the terms could potentially change). Walmart is the potential beneficiary of Flipkart shares' deal. What is the need to sell Flipkart to Walmart?

What's in store for Flipkart's employees? 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. The stock options given to Flipkart employees usually have a vesting period of four years.

According to the filings, the company also bought shares from its present and former employees on December 13, 2017 for U.S. $100 million that were given as stock options.

Flipkart may have a town-hall for personnel on Friday, with Walmart CEO Doug McMillon likely to wait, one of the sources stated.

What's threatening to play party-pooper? One of the largest M&A deals in India, which values Flipkart at $20 billion, will be made official in a town hall meeting at Flipkart's headquarters in Bengaluru.