Published: Fri, May 11, 2018
Technology | By Russell Knight

Naspers sells Flipkart stake to Walmart for $2.2bn

Naspers sells Flipkart stake to Walmart for $2.2bn

Walmart Chief Executive Doug McMillon said Flipkart group, in which the USA retailer is acquiring 77 per cent stake, would continue to operate as a separate board-managed company with co-founder Binny Bansal as the CEO.

Flipkart sealed the world's largest e-commerce deal yesterday with Walmart, cementing India's place in the global e-tailing league.

However, Assocham Secretary General D S Rawat has said he sees the Walmart-Flipkart deal as a salute to the success of an Indian start-up that pioneered the fledgling online retailing in a country where bulk of the trade is in the unorganised sector.

Binny Bansal, who had co-founded Flipkart with Sachin 11 years ago, will retain some of his 5.5 percent stake in India's biggest online retailer and will be Chairman of the company's Board.

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Since then, Climan and Moore have worked closely on a number of large deals, including advising Marvell Technology Group Ltd. on its pending $6 billion buy of Cavium Inc. and Synopsys Inc. on its $565 million acquisition of Black Duck Software Inc.

Sanchit believes this deal is the first step in a long journey, which includes a three-year roadmap wherein you could expect to see a Flipkart IPO by 2022.

Walmart CEO Doug McMillon said the United States retailer will help modernise the often scruffy and small shops to bring them up to global standards. Walmart has made a decision to buy Flipkart to increase its business in India.

McMillon further reiterated that the Flipkart deal was good for the country as it would help create millions of jobs over time and help the economy through local sourcing of goods by the company.

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The combination with Walmart could be controversial, with concerns about how a deal might affect India's smaller retailers. For PM Modi, appeasing small traders and farmers, who are part of the BJP's core constituency, is as important as upholding India's image as a place that welcomes foreign investment.

"Though the focus will be on serving customers and growing the business, we will support Flipkart's ambition to transition into a publicly-listed, majority-owned subsidiary in the future", Walmart said.

The two companies are expected to leverage their combined strengths, they will also maintain distinct brands and operating structures. "It is to be noted that nowhere in the world, Walmart has a market place model", he said in his letter.

Accel India operates under US-based Accel's banner but is managed and run independently. Over the last 10 years, Flipkart has become a market leader by focusing on customer service, technology, supply chain and a broad assortment of products.

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Binny Bansal, Flipkart's co-founder and group chief executive officer, said, "This investment is of vast 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". Big players like Sequoia Capital had passed up on the opportunity to invest in Flipkart several times.

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