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Flipkart-Walmart deal today: 10 things to know

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NEW DELHI: US retail giant Walmart is all set to announce the acquisition of Indian e-commerce player Flipkart today. This is going to be the boldest bet of Walmart in India with picking around 70 per cent stake in Flipkart. The deal, which is one of Walmart’s “biggest overseas deals”, is likely to value Flipkart at roughly $18 billion to $20 billion. US retailer’s chief executive Doug McMillon is also expected to outline its India strategy to Flipkart’s employees.

Here are 10 things to know about the deal:

1. On its part, Walmart will signal that it is retaining the Indian management led by co-founder Binny Bansal, apart from investing in creating back-end infrastructure to boost the country’s farm sector

2. Sachin Bansal, Flipkart’s co-founder and its CEO for nine years, is exiting the company by selling his entire 5.5 per cent stake to Walmart.

3. A person familiar with the Flipkart-Walmart talks said, “Binny Bansal will stay on as the group CEO and will be additionally appointed as the new executive chairman of the Bengaluru-based e-tailer.”

4. Early investors like Tiger Global and Accel Partners will retain some small shareholding along with Tencent. Others like SoftBank and Naspers are expected to sell out completely.

5. Sources said Walmart’s plan entails broadening its online presence in the country and link up with 5-6 million kirana stores to help them modernize and be part of the overall supply chain that the US giant wants to establish.

6. “There will be large investment in technology both on digital payments front as well as other areas,” said a source with direct knowledge of the company’s future plans.

Walmart graph

7. Walmart is likely to bring its managerial expertise, although the existing leadership in Flipkart is expected to stay as they “understand the market well”.

8. Walmart India owns and operates 21 stores under the cash-and-carry system in nine states across the country.

9. It also has a global sourcing centre in Bengaluru and a technology centre, which employs 1,200 engineers. The sourcing centre procures non-food products from domestic companies for over a dozen global markets.

10. Analysts said they expect a large chunk of the fresh investment in strengthening back-end infrastructure. They said with acquisition of Flipkart, Walmart will be able to extend its expertise in managing physical goods in the digital space.

(With inputs from agencies)

Updated: May 9, 2018 — 5:42 am

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