Walmart has been struggling to compete with the likes of Amazon in the online space these last few years, but a new acquisition aims to help them in India. For those who don't know, Flipkart was founded in 2007 and has since been valued at $20 billion selling various electronic devices within the country. That was until Walmart recently signed a deal to acquire around 73-75 percent of Flipkart for up to $16 billion. Walmart has had their eyes on a number of other companies before this deal was made but it looks like Flipkart's massive logistics network will play an important role in building a robust grocery marketplace.
Since its inception, Flipkart has grown to the point where they were able to start acquiring other companies. This started happening in a big way back in 2010 when they purchased WeRead, a social book discovery tool, and has continued today with their recent offer going out to Snapdeal. That offer was rejected but there didn't seem to be any sign that the Indian e-commerce giant had plans to slow down. Now, with Walmart owning the majority of the company, they'll have the advantage of having even deeper pockets along with decades of retail expertise in skills from logistics to marketing.
This deal has previous investor SoftBank Group Corp selling their 20+ percent of the company while others including Tencent, Microsoft, and Tiger Global don't have plans to cash out just yet. It's being reported that Alphabet Inc will likely participate in this investment by tossing in $3 billion themselves. Part of this deal includes a plan to sell shares of the Indian e-commerce firm in an initial public offer (IPO) in three years time. It seems like they have been holding off on this move until the company gets closer to being profitable.
The CEO of Flipkart, Kalyan Krishnamurthy, will continue to run the company for the foreseeable future but one of its two founders (either Sachin Bansal, chairman, or Binny Bansal) could be leaving after the deal has been finalized.
Source 1: Factor Daily Source 2: Bloomberg
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