After acquiring Flipkart, Here's what Walmart needs to face in India

After acquiring Flipkart, Here's what Walmart needs to face in India

In August 2016, Walmart acquired US-based Jet.com for about United States dollars 3.3 billion, Moodys said. But Walmart is betting on the phenomenal growth in India's online retailing market.

The offer from the Bengaluru-headquartered company comes close on the heels of US-based retailer Walmart buying close to 77 percent stake for roughly $16 billion.

To be sure, the ESOP pay-out by Walmart will still be the biggest-ever in the Indian start-up world and is expected to turn a few hundred Flipkart employees into crorepatis.

Further, employees can liquidate their stock options in three instalments - half of the stock on the date of closing of the Walmart deal, 25% a year later, and the remaining stock options two years after the first liquidation. "Despite this deterioration, the acquisition is credit positive because it provides immediate scale in Indias burgeoning retail e-commerce sector and we expect that a combination of increased cash flow and debt reduction will push the RCF/net debt ratio back above our 35 per cent".

Speaking about PayTM mall, the online marketplace, which primarily on its online-to-offline (O2O) model, had a market share of about 5.6% in 2017, its first full year of operations, with gross merchandise volume, or gross sales, of about $1 billion, according to Forrester Research.

The deal, which still needs regulatory approvals in India, has to close by March 09, 2019, failing which it could be terminated, as per the SEC filing. The speculations for Walmart acquiring a considerable Flipkart share was in the news for some time now. "We protested when Walmart and Bharti Enterprises announced a tie-up and ensured that they did not set up shop in Tamil Nadu and now Walmart is trying a similar initiative", said S. Murugesan, a wholesale trader in Broadway.

While SoftBank explores its options to retain its position in the Indian ecommerce market after the Flipkart-Walmart deal, Flipkart is also gearing up for the likely developments resulting from the deal.

It also said it could appoint or replace Flipkart's chief executive and other key executives of group companies in consultation with Bansal and the board.

Walmart has already revealed plans for an initial public offering (IPO) for Flipkart, within four years of the completion of this acquisition.

There has been much speculation over Flipkart's listing on the stock exchanges for years now. Now, that decision rests in the hands of its new owner, Walmart.

Related:

Comments

Other news