It was in October when the Flipkart nodded for the $2.5 billion investment accord with the Software Group Corp., the head honchos from the American retail titanic Walmart wanted to sew up a promising deal with Flipkart.
Walmart is even known to already hold the primordial thought with Flipkart in the year 2016, but since the latter wasn’t satisfied enough to consider it plausible, they claimed that it was a little different this time.
It was the Flipkart’s most effective shareholder and Board member, Tiger Global Management partner Lee Fixel, that has been the source of mediator between the American giant Walmart and the Indian e-commerce retail Flipkart. It was known to be in contact with Walmart for a really long time.
Walmart has been threatened by the ceaseless magnification of Jeff Bezos’ Amazon in the US which has been inexorable in acquiring its rule on Walmart’s soil. Although its online business is still lagging behind to outrun, it has, however, laid a cord of e-commerce possessions with Jet.com, inclusive with a striking deal of $3.3 billion in August 2016.
Walmart is a peripheral pro in China with the acquisition of a petty stake in online retailer JD.com which is a small opponent of the titan, Alibaba.
The relatable lingering growth of Flipkart, in contrast to the swift, expected one was one of the major reasons for being an open potential for grabs for the investment in the Indian e-commerce by Walmart, which they seized in a jiffy!
Later, the Flipkart’s co-founders, Sachin Bansal and Binny Bansal were summoned to the Walmart’s headquarters in Bentonville, Arkansas.
The Flipkart operating buffs were stunned by the Walmart’s confident interest in taking over the entire stake in Flipkart, unsimilar to its announcement of the minimal investment in the former deal in 2016.
Tiger Global’s Fixel was ecstatic for the following deal as he had invested his entire sweat of worth $1 billion into Flipkart with a belief that it would be able to payback multiple folds of the same, but with many misfortunes befalling the Flipkart, it finally began to notch up in the business in late 2016, headed by Kalyan Krishnamurthy, the former Tiger Global executive, hailed by Fiscal. Finally, in the year 2017, the Flipkart was in the position to acclaim a whopping $3 billion in the two financing rounds at a pre-money estimation of $10.2 billion from SoftBank, eBay, Tencent, and Microsoft.
Later, despite the Flipkart’s acquisition of worth $3.5 billion in the bank, Fixel’s dream of acquiring over $50-100 billion led it to impel other investors including SoftBank to pertain the talks with Walmart for the business investment. It finally led to its success when the Walmart executives including CEO Doug McMillon, M&A head Emily McNeal, and international CEO Judith McKenna planned their visit with the Flipkart’s board members at a five-star hotel in Bangaluru in December.
With the Flipkart’s sufficing to the plausibility of the deal, it then hired Goldman Sachs as its investment banker to scrutinize the offers made by the latter.
Walmart, on the other hand, left no stone unturned in making the deal a promising and a certain one by picking up the support from their promoters as well. Penner, who is the son-in-law of Rob Walton, son of Walmart founder Sam Walton had been one of the most vital pillar throughout the finalization of the agreement as he was successful in protecting its legacy due to his long-term B-school classmate relations with the SoftBank representative, Kabir Misra, who was among the Flipkart’s board.
Jeff Bezos had tried to enter into the wheel too by having a conversation with the Flipkart’s Fixel and SoftBank’s Masayoshi Son, but winding up the pros and cons with the other investors, the latter finally gave a nod to Walmart.
The wrapping up of the deal faced a lot of hurdles as well due to Sachin Bansal demanding for more rights in the brand new entity, whistling for a bigger role in the sale but was sternly opposed by Flipkart’s CEO, Krishnamurthy and since Fixel had their support for the CEO, it led to the quitting of the co-founder Sachin Bansal who has been behind Flipkart’s initiation 11 years ago!
With the majority stake acquired by Walmart and the remaining one under the possession of Binny Bansal, they will continue to be under the process at different platforms, while pertaining to their deal. Tiger, Tencent, and Global will continue to be on Flipkart’s board with the additional tying up with the new members from Walmart.
The Walmart’s investment includes a funding worth $2 billion which is sure to spark the ignition of Flipkart’s swell in the market. In addition, Walmart is known to park a grand investment in many e-commerce units around the world like UK grocery unit, Asda with J Sainsbury plc and even in China with its marginal investment in JD.com along with it’s bracing of Sam’s Club store base in Asia’s Largest country. It is, however, dropping its hold in the under operating regions like in Brazil and establishing a stronger hold in the potential seeking areas.
Acquisition on the majority stake in Flipkart, Walmart is a very professional and an experienced tycoon in every sector of the retail marketing is bound to make a profitable outcome to Flipkart, one of it being its grocery unit expertise. This move will also back the farmers, add too many more employment and also support various small businesses.