Walmart buys 77 percent stake in Flipkart: Here are Top 10 takeaways

Global retail giant Walmart on May 9, 2018 formally signed a definitive agreement to acquire 77 percent stake in Flipkart with an investment of around USD 16 billion.

The deal will value Flipkart at around USD 20.8 billion, up from its previous valuation of USD 12 billion.

Here are key takeaways of the deal:

Impact of the deal on small vendors

The Walmart-Flipkart deal is expected to impact the whole segment, be it the competitors or the consumers. The deal has worried the small vendors, who fear of being wiped off from the market. Walmart has a reputation of killing small businesses with its ultra-low prices.

If Walmart brings in its own private labels on Flipkart, it might make it difficult for other sellers to operate. This major concern was shared by the All India Online Vendors' Association (AIOVA), which has 3500 sellers on large platforms like Flipkart and Amazon.

Walmart has been trying to enter India for years but all its efforts proved to be futile. However, the company managed to run 'cash-and-carry' wholesale business in the country.  It currently operates 21 such stores in India.

Positive side of the deal

• Walmart’s investment will benefit India in terms of quality and affordable goods for customers, creation of new skilled jobs and fresh opportunities for small suppliers, farmers and women entrepreneurs.

• Walmart's investment in Flipkart will give an edge to Flipkart to compete with sellers like Amazon. Moreover, Walmarts’s rich extensive experience in retailing, logistics and supply chain management will help Flipkart grow its business without any hassle.

• In terms of competition, the deal is expected to intensify the battle between Amazon and Flipkart. On one side, this war could shrink the marketplace for small vendors, while, on the other side, this war between Flipkart and Amazon could lead to a vast supply chain and generate a large number of jobs.

• Overall, this Walmart-Flipkart deal is expected to be a good boost for the ecommerce sector.

What Walmart-Flipkart deal has in pocket for India?

Walmart’s investment in Flipkart will support national initiatives and will bring sustainable benefits to the country.

• Job creation: The deal would create jobs through development of supply chains, commercial opportunity and direct employment.

• Support Make in India initative: Walmart will collaborate with kirana stores and members to help them modernise their retail practices and adopt digital payment technologies, thus, indirectly supporting the 'Make in India' initiative of PM Modi.

• Reduce food wastage: Walmart will work to improve the waste management practices and will invest in supply chains, especially cold storage.

10 major Mergers and Acquisitions other than Walmart-Flipkart

The Walmart-Flipkart deal is probably the biggest in the e-commerce space, however, there are other market players as well who have either merged their businesses with the other's or acquired the whole business or firm. Have a look at the 10 major mergers and acquisitions of the recent times:

• Vodafone and Idea Cellular merged their India operations in 2017 in a USD 23 billion deal.

• E-commerce giant Amazon bought organic grocery chain Whole Foods for USD 13.7 billion.

• iPhone maker Apple acquired Shazam for USD 400 million, a company that lets users identify songs, movies, TV shows, and commercials from short audio clips.

• Disney acquired certain assets of 21st Century Fox (FOXA), the parent company of FOX Business, for approximately USD 52.4 billion in 2017.

• US media company Meredith Corporation in 2017 acquired Time Inc., the publisher of Sports Illustrated and Fortune magazines, for USD 2.8 billion in all-cash deal.

• Global fashion luxury brand Michael Kors in 2017 bought global luxury footwear and accessories brand Jimmy Choo for approximately USD 1.2 billion.

• Chinese tech major Xiaomi in 2017 signed an agreement for business collaboration and patent licencing with Finnish mobile phone manufacturer Nokia to acquire its patent assets.

• Alphabet’s Google division acquired a part of HTC’s mobile division team for USD 1.1 billion.

• Anil Ambani-led Reliance Communications and Maxis Communications Berhad (MCB), promoters of Aircel merged their wireless businesses to form the fourth-largest telecom operator in the country.

• Russia's Rosneft Oil Company in 2016 acquired India’s second biggest private oil firm Essar Oil in an all-cash deal valued at about USD 13 billion.