Walmart buys 77% of stake in Flipkart at $16 Billion

Flipkart Chart3

Flipkart Chart3

U.S. based world's largest retailer Walmart after a long round of speculation on Thursday officially announced that it would buy 77 per cent of stake in Flipkart for $16 billion.

If SoftBank decides to hold on to its stake a little longer, it will surely dent Walmart's announced plans to acquire a 77 per cent stake in Flipkart for $16 billion.

Another dimension to the deal are the tens of thousands of small retailers for whom WalMart acts as a wholesaler. Investors sent Walmart shares soaring to a record as it appeared the deal had given Walmart powerful ammunition in its battle with Amazon.

The mega Walmart-Flipkart deal may have created some tough competition for their bitter rivals like Amazon and Alibaba, but almost hundreds of current and former employees of Indian e-commerce giant Flipkart, it has come as a blessing! Why?

"This takeover once again exposes the naked betrayal of all promises made by the Modi government: Make in India has now become Make for India", it said.

According to a PTI report: He is also learnt to have said the company intends to "empower" Flipkart and its staff as well as learn from them about building full ecosystems and payments.

Influential trade body of offline retailers and traders, The Confederation of All India Traders or CAIT has slammed the Walmart-Flipkart deal, and have described it as bad for India. Lately, Walmart has been facing a decline in its sale, but with Flipkart, it can increase its market value in India. He's certainly mindful of past missteps overseas, such as his 2011 decision to buy an unprofitable, second-tier online marketplace in China that's forced the company to play catch-up to Alibaba, the Amazon of China, ever since.

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Edelweiss Securities says the deal has opened up potential for a surge in online-offline partnerships.

India is not an easy turf Back in USA, the deal has not gone down well with Walmart shareholders.

By joining forces with Walmart, perhaps Flipkart can build on that lead. S&P Global Ratings said the heavy spending to compete with Amazon could threaten Walmart's pristine credit rating.

Walmart's aggressive bidding to outdo rival Amazon in India's e-retailing race and the fact that it would take years before its India investments really fructify (Flipkart is seen making losses for the next couple of years) appear to have disappointed its investors. Kalyan Krishnamurthy will continue to be the CEO of the company, while co-founder Binny Bansal will be the Group CEO of Flipkart. Proliferating e-commerce is bad for cash-and-carry retail, which has already witnessed rapid slowdown and consolidation over the past few years.

"This investment is of enormous importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India".

It looks as though Amazon has stopped bidding on product listing ads, after a year and a half of running these.

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