Softbank Chief Confirms Deal to Sell Flipkart

Judy Cobb
May 11, 2018

Masayoshi Son, the CEO of Japan's SoftBank, had earlier confirmed to reporters in Tokyo that the deal had been agreed.

E-commerce sales in India hit $21 billion (roughly Rs. 1.41 lakh crores) past year according to market research company Forrester, and are expected to soar as its population of 1.25 billion people make greater use of internet access.

The remainder will be held by existing shareholders, including Flipkart co-founder Binny Bansal, China's Tencent Holdings, Tiger Global Management and Microsoft Corp, the company said.

The deal, reportedly worth around $15 billion (roughly Rs. 1 lakh crores), is expected to be announced officially later Wednesday, with Walmart CEO Doug McMillon in Bengaluru, where Flipkart is headquartered.

"The deal also underscores Walmart's long-term commitment to India, where it looks to serve customers, support job creation, small businesses, farmers and women entrepreneurs".

Now, ET claims Bansal was deeply engaged in the negotiations with Walmart, and was even planning to buy more shares and not sell his stake.

But now, the marriage of Walmart and Flipkart changes everything. "This investment aligns with our strategy and our goal is to contribute to India's success story, as we grow our business".

"This deal with Walmart can provide Flipkart the expertise of running offline stores, access to sellers and manufacturers, supply chain and the know-how to get into the grocery segment". The purchase, which is also the largest acquisition in Walmart's history, is still subject to regulatory approval in India. "Walmart's investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future", said Walmart. Flipkart News Major stake of Flipkart sold to Walmart:Walmart bought 77% of the equity stake from Flipkart investing 16 billion United States dollars. It ships eight million orders per month and operates 21 warehouses.

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With a huge user base, India looms as an attractive market for retailers. Amazon needs to succeed in another high-growth market to prove it can effectively replicate its model beyond North America, and it has been aggressively expanding in India.

As for its Flipkart deal, the firm is presumably celebrating it today.

The deal is the largest-ever in e-commerce, according to data compiled by Bloomberg.

Praveen Khandelwal, secretary general of the Confederation of All India Traders (CAIT), was more assertive in his views on the adverse impact of the deal on small retailers. The latter firm launched in 2007 when India's e-commerce market was only taking shape and has since established a dominant position with more than 54 million active customers.

Flipkart competes with Amazon across a range of product categories. "No other market, except China and the US, can compete in terms of total retail opportunity". "We took on some of the biggest challenges and solved many complex problems for india", Bansal reminisced. Amazon has previously pledged to pump in USD$5bn (£3.69bn) to grow its presence in India. Bricks and mortar retailers were not threatened and many dismissed e-tailing as a foreign concept saying that Indians want to touch and feel' whatever they buy. This is a time-consuming process and both these companies need patient capital to capture the online retail opportunity.

Walmart said it plans to fund the India deal through a combination of newly-issued debt and cash on hand.

No, Walmart-Flipkart deal certainly doesn't "assure" that every other e-commerce portal would make a billion dollar exit, but yes, it certainly triggers that possibility.

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