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walmart: Flipkart co-founder likely to quit after Walmart takeover

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MUMBAI: The partnership of Flipkart co-founders Sachin Bansal and Binny Bansal is the stuff of modern Indian business legend. But it could be coming to an end.

Flipkart’s co-founder and chairman, Sachin Bansal is likely to quit the company board as Walmart, the world’s largest retail giant, nears a deal to pick up a majority stake in India’s most valued internet company, people familiar with the development said. Flipkart did not respond to queries by TOI on the matter.

Sachin, 36 and Binny, 35, are not related. A batch apart in IIT-Delhi, they became friends as colleagues in Amazon before starting Flipkart in Bengaluru as an online bookstore back in 2007 before going on to become the country’s pre-eminent e-commerce company.

People familiar with the negotiations said Walmart has been keen on retaining only one of the two founders as they fine-tune the deal. “Sachin is most likely to leave and Binny will stay. Walmart has to make sure it buys off his shares, which is what is being worked out,” said a source.

The Bansals collectively own around 10% stake in the country’s largest online marketplace.

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Even as Sachin’s exit from Flipkart looks imminent, Walmart is holding on to Kalyan Krishnamurthy, the web retailer’s present CEO, sources said. “Binny and Krishnamurthy have backed the deal with Walmart and the two are seen leading the final negotiations, which will likely result in a share purchase agreement by Walmart by early next week,’ another person close to the deal said.

Walmart is on course to announce a $8-10 billion deal to pick up a majority stake in Flipkart over the next few days. TOI first reported Walmart’s interest in getting a route to majority at Flipkart in its February 8 edition.

“Flipkart’s largest investor SoftBank and Bansal were aligned in pursuing a merger deal with Amazon, which didn’t get the backing of the majority shareholders,” said a person in the know. The latest developments suggest that there has been a divide at the top of Flipkart with the two co-founders taking opposite sides in deciding the future of India’s most valued internet company.

Sources said Sachin’s continuation would become untenable if the proposed deal with Walmart goes ahead. Walmart is seen to be keen on bringing Binny and Krishnamurthy (an ex-Tiger Global executive) on the board, besides having at least three of their own nominees. Krishnamurthy, who took over as CEO from Binny in January last year, is seen to have turned around the e-commerce major after two sluggish years when it ceded market share to Amazon.

“There has been a shareholder realignment within Flipkart over the past few weeks, which has brought top level fissures into the open,” said a source cited earlier in the report. SoftBank and Tiger Global are the two largest investors in Flipkart, with the likes of Naspers, Accel Partners, and DST Global being the other key shareholders.

Updated: May 4, 2018 — 2:08 am

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