After the unsuccessful tryst with Indian FDI regulations, Walmart is ready to penetrate Indian market through the closing of $16 billion acquisition deal with Flipkart. Flipkart, which was earlier controlled by a Singapore-registered entity, has given its 77% shares to Walmart. It is being called the world’s largest economic deal.
The employee stock ownership plans, including the unvested, have been lifted by the deal to $2 billion, and the current value of total employees of Flipkart has come to be more than $1 million.
“We hope we learn from you how to build an ecosystem, more about innovation and payments — we will help with sourcing, supply chain expertise,” Walmart chief executive Doug McMillon told Flipkart employees.
“It is our intention to just empower you and let you run — speed matters, decisiveness matters,” he added.
For Walmart, who has been unsuccessful in entering Indian Market, this is a victory. It’s first venture with Bharti went bad. Indian government repeatedly denied Walmart to open stores in India. However, by investing in online business (B2B) where 100% foreign investment is allowed, Walmart steered clear of any FDI violations. It was perhaps, the only strategic move left for Walmart, since Walmart could not have opened its own online retail business in India, as foreign investment in B2C is not allowed.
The only deals that came close to Walmart – Flipkart deal were $14.6-billion Bharti-Indus Towers merger and the $12.9-billion Essar Oil-Rosneft transaction. Flipkart owner Sachin Bansal has exited but Binny Bansal remains invested in Flipkart.
Steurt Walton, the grandson of Walmart’s founder, Sam Walton is to join board of Flipkart. Walmart International president Judith Mckenna and Dirk Van den Berghe, executive VP and regional CEO, Walmart Canada and Asia, are also likely to become directors. There will be three of Walmart’s member in Flipkart’s 10-member board.