Walmart Inc. on Wednesday (May 09, 2018) announced its much-anticipated deal to buy a controlling stake in Indian e-commerce company Flipkart. The deal is the largest-ever in e-commerce, according to data compiled by Bloomberg.
Bentonville, Arkansas-based Walmart will acquire a 77% holding in Flipkart Group for $16 billion, the companies said in a statement. Flipkart co-founder Binny Bansal and other shareholders will hold the remainder. The tie-up values the Indian e-commerce giant at about $20.8 billion. Walmart said it plans to fund the deal through a combination of newly-issued debt and cash in hand. Its investment will include $2 billion of new equity funding and the company said it remains in talks with other potential investors to join the funding round. A new investor joining could lower Walmart’s stake, but the company plans to continue to retain majority control of Flipkart. Reuters has previously reported Google-parent Alphabet may buy a roughly 15% stake in the company for $3 billion.
Indian media reported last week that Amazon.com Inc., which has been pouring billions of dollars into India to ship goods to shoppers faster, had made a formal offer to buy 60% of Flipkart but that Flipkart’s founders preferred Walmart.
Here are the key facts about Flipkart:
■ The company was founded in 2007 in Bengaluru by Sachin Bansal and Binny Bansal. The Bansals, who are not related, met in 2005 at the Indian Institute of Technology, Delhi. They are both former employees of Amazon.
■ Flipkart at first sold books, later expanding to sell music, movies, games, electronics and mobiles, the category that has driven growth. The first book it sold was John Wood’s Leaving Microsoft to Change the World. It launched logistics arm Ekart in 2010 and started the now popular cash-on-delivery service.
■ It opened its first office in Bengaluru in 2008 and opened offices in Delhi and Mumbai in 2009. Last month, Flipkart consolidated all its Bengaluru offices in one large campus.
■ In 2011, Flipkart domiciled to Singapore, as it looked to woo foreign investors to fund rapid growth.
■ The first billion-dollar Indian e-commerce company, Flipkart sells 8 million products across 80 plus categories. It has 100 million registered users, 100,000 sellers, 21 warehouses, 10 million daily page visits.
■ In 2016, Binny Bansal took over as chief executive officer (CEO) and Sachin Bansal became executive chairman.
■ Last year, Kalyan Krishnamurthy, previously an executive in Flipkart investor Tiger Global, took over as Flipkart CEO. Binny Bansal became CEO of the whole group, which includes fashion portals Myntra-Jabong, payments unit PhonePe and logistics firm Ekart.
■ The company’s board has seven members. Dropbox Inc.’s chief technology officer, Aditya Agarwal, joined the board in 2014.
Mergers & Acquisitions:
■ Bought online apparel retailer Myntra in a deal pegged by sources at about $300 million in 2014, and another retailer Jabong for $70 million in 2016.
■ Last year, Flipkart offered to buy rival Snapdeal but the deal fell through. SoftBank, Flipkart’s largest investor, also has a stake in Snapdeal, as does China’s Alibaba Group Holding Ltd.
■ Flipkart bought payment startup PhonePe in 2016.
■ In exchange for an equity stake in Flipkart, eBay agreed to make a $500 million cash investment in and sell its eBay.in business to Flipkart in 2017.
■ Japan’s SoftBank Group Corp. owns a fifth of Flipkart through its Vision Fund. SoftBank expected to sell its whole stake in the Walmart deal, Reutersreported last week.
■ Early investors New York-based hedge fund Tiger Global and US private-equity firm Accel Partners will sell a majority of their stakes, Reuters reported on Tuesday.
■ Other investors include the founders and Napsers Ltd, China’s Tencent Holdings Ltd, eBay Inc, and Microsoft Corp.invested $1.4 billion last year.
■ Financials, according to filings sourced by business intelligence platform paper.
■ Flipkart Group’s consolidated loss attributable to owners of the company in fiscal 2017 widened to Rs8,770 crore, from Rs5,216 crore a year earlier.
■ Consolidated revenue jumped 29% to Rs19,855 crore in fiscal 2017. Reuters
(Bloomberg contributed to this story)