Published: Fri, May 11, 2018
Money | By Ethel Goodwin

Walmart deal will make Flipkart's employees millionaires

Walmart deal will make Flipkart's employees millionaires

On Wednesday evening, U.S. retail giant Walmart confirmed that it is acquiring 77 percent of Indian e-commerce startup Flipkart for $16 billion.

He said SoftBank's $2.5 billion stake in the company would be worth $4 billion with the acquisition. South African internet and entertainment firm Naspers, which had invested United States dollars 616 million in Flipkart in August 2012, sold its entire 11.18 per cent stake in the company to Walmart for USD 2.2 billion. Flipkart has 34 per cent market share while Amazon controls 27 per cent of Indias online sales.

Walmart's head of investor relations, Brett Biggs, stated at a conference that China and India have the major potential to be huge growth markets for Walmart due to the fact that more than 33% of the world population resides in these two countries and hence they continue to be very important chances for Walmart.

According to Mudit Jaju, global head of e-commerce at media, content and technology agency, Wavemaker, the focus on Amazon has been a distraction and traditional retailers, like Walmart, can not be ignored.

The deal is subject to regulatory approvals including Competition Commission of India, and is expected to close later this year.

Sharma expects online grocery to be the fastest growing segment in the e-retail space, growing at a 65-70 per cent compounded average growth rate (CAGR) to touch $100-billion in revenues by fiscal 2020. This is partly because although the Internet and Mobile Association of India estimates that there are approximately 481 million internet users in India, the number of individuals with enough disposable income to shop online is still relatively small.

Walmart runs 21 Best Price wholesale stores in the country that sell everything from fast-moving consumer goods to furniture to other retailers and institutions.

Like Wiesel, Charlie O'Shea, lead retail analyst at Moody's, highlighted the investment Walmart is making for the future, particularly as India's smartphone use booms and millennials drive online shopping. Walmart CEO Dough McMillon has landed in Bangalore to announce the deal officially.

Amazon has expanded aggressively since it entered the Indian market in 2013. "So, I wanted to write to you personally to celebrate the news, fill you in on what this investment means, and whether there are going to be any changes in your relationship with Flipkart", he added.

Flipkart's stock options are granted over a four-year period, with employees allowed to vest them every month after a one-year threshold.

The announcement also shows that a late, albeit unconfirmed, bid for Flipkart by Amazon, was rejected.

At a town hall yesterday, Flipkart's second co-founder and group CEO Binny Bansal told employees that Sachin was "not part of the platform anymore".

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