Business & Finance

Merger of the Walmart and Flipkart

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The news is rife amidst the negotiations between Walmart and Flipkart, for a significant stake in Flipkart that the former will likely gain about three to four seats on the ten-member board of India’s largest online retailer that will continue to be run as an independent company if the deal goes through. The troika of cofounders Binny Bansal and Sachin Bansal along with chief executive officer Kalyan Krishnamurthy will remain in their current posts as the country’s most valuable start- up venture.

In the meanwhile, a potential and lucrative offer from rival Amazon to invest in Flipkart is also in the queue. Japan’s Softbank, which owns over 20% stake in Flipkart, is said to be in favour of an offer from Amazon but other investors are wary as they believe that such a deal could run into trouble with competition regulators.

Walmart is expected to invest over $12 billion into Flipkart. “They may get a CFO at the helm and legal compliance will be handled by Walmart,” said one of the persons. Walmart is aiming for at least a 55-60% stake in Flipkart in a deal likely to value the company between $18-20 billion. “They (Walmart) are investing because they don’t know how to run an online commerce company,” said a second source. “With the investment in JD and acquisition of Jet they know that running an online business is very different from running a retail company.” Another person said, “Flipkart is taking a longer-term view and is looking at the entire team. They are excited about the market and want everyone to be incentivized for an IPO.”

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