Walmart’s big Flipkart deal is an admission of defeat
Walmart Inc. might want to portray its $16 billion purchase of India’s largest e-commerce firm, Flipkart Group, as a brilliant strategic move, long-planned in secret, that would allow the U.S. retail giant to manage the transition away from big-box stores globally. Yet, the truth is that the deal represents a second-best outcome — if that — for Walmart as well as for Indian consumers and farmers.
How Amazon missed three opportunities to acquire Flipkart
In the 11 years that Walmart has operated in India, it’s signally failed to build up its own business. That’s not entirely the company’s fault. In fact, it’s a reminder that India remains, in some ways, as inhospitable to foreign businesses as the People’s Republic of China.
When Amazon began operations in India in 2013, it decided it needed to be aggressive and not repeat the mistakes it made in China. The online commerce giant also realised its global playbook that had served it well in developed markets such as Germany and Japan would not work in India.
Many employees at Flipkart become dollar millionaires
Amazon entered the latest negotiations midway with an attempt to outbid Walmart by offering a deal valuation of $22.5 billion for Flipkart. Walmart’s lower bid at a valuation of about $20 billion triumphed because Flipkart’s board decided regulatory clearance would be easier for this, as ET reported on May 2. The Seattle-based online retail giant had a chance to acquire Flipkart at least twice before. Amazon offered $500-700 million for Flipkart before it launched operations in India in 2012.
At the employee town hall on Wednesday, there was a big cheer when Flipkart co-founder and group CEO Binny Bansal announced a 100% buyback of vested ESOPs (employee stock options). Sources told TOI that the buyback could be at around $150 (Rs 10,000) a share.