Walmart outbids Amazon for $15B majority stake in India's Flipkart

Walmart outbids Amazon for $15B majority stake in India's Flipkart

Walmart outbids Amazon for $15B majority stake in India's Flipkart

The Confederation of All India Traders (CAIT), an umbrella association representing millions of traders has slammed the Flipkart-Walmart deal, alleging that that it will encourage malpractices and predatory pricing in e-commerce in the absence of any monitoring mechanism and create an uneven level playing field where offline and online traders will be unable to compete.

The two Bansals used to be colleagues at Amazon before - mirroring the USA firm's starting point - they started Flipkart as an online bookstore 11 years ago. This is because Walmart will provide Flipkart with the necessary financial muscle as well as retailing expertise in various areas including marketing and logistics. "It's not surprising that Walmart wants to take over Flipkart, which has built an exceptional engineering talent at many levels of operations", affirmed Durai. China's Tencent Holdings Ltd, eBay Inc and Microsoft Corp invested $1.4 billion past year.

The bar on multi-brand retail FDI may have queered the pitch for huge foreign big box retailers like Walmart, who are now seeking the unbridled route into India via e-commerce.

Walmart is expected to get three board seats at Flipkart and will also have a say in the appointments of the group's finance, legal and compliance heads.

Reports indicate that the board of Indian online retailer Flipkart has given its approval for selling a 75% stake to a group led by American giant retailer Walmart at a price of $15 billion. It is worth mentioning here that the American online retail behemoth has already pledged to invest about United States dollars 5.5 billion (about Rs 37,000 crore) in India.

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Flipkart is weighing option to renewing discussions of investment in multiple firms such as Pepperfry, Swiggy, BookMyShow and a host of smaller companies among others, according to a report in the Business Standard. Sachin Bansal remained as executive chairman.

The company was founded in 2007 in Bengaluru by Sachin Bansal and Binny Bansal.

The $15-billion buyout of e-commerce player Flipkart by USA retail giant Walmart is likely to attract capital gains tax under Indian laws, similar to the tax imposed on Vodafone, even though the entities are headquartered overseas.

- Bought online apparel retailer Myntra in a deal pegged by sources at about $300 million in 2014, and another retailer Jabong for $70 million in 2016. A major portion of the funds that Flipkart raises will be used to give exits to existing investors, but it is expected to raise a handsome $2-3 billion in primary capital that will help it fight Amazon.

Also under the proposal, Flipkart investor Softbank Group Corp.is slated to sell its 20% stake for about $20 billion, according to a Bloomberg report. Other top Walmart executives will be present in India for the announcement, another source revealed to Reuters.

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