CAIT demands govt scrutiny of Walmart-Flipkart merger deal

Devin Lawrence
May 9, 2018

USA retail giant Walmart is expected to announce this week that it will buy a majority stake in Indian e-commerce company Flipkart, in what would be a blow to rival Amazon.

USA e-tail giant Amazon has infused fresh capital to the tune of Rs 2,600 crore into its India unit, Amazon Seller Services, to strengthen the war-chest of the company against domestic rival Flipkart. The deal is being worked out in such a way that these investors will have an ability to sell their proceeds to Walmart in future at the current valuation worked out by the US-based company.

As part of the deal, co-founder and executive chairman Sachin Bansal will likely exit completely, selling his 5.2 percent stake.

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Walmart is expected to close the deal with Flipkart before the end of week, reports Reuters citing two people aware of the development. American multinational retail corporation Walmart has been in the process of acquiring Flipkart, India's second largest e-commerce portal, for a while and it seems the deal may finally be made official tomorrow. Barring an unforeseen event facing Walmart Amazon is now no longer in the running for the acquisition of Flipkart. Additionally, Walmart does business in China with JD.com, which is closely allied with Tencent, an investor in Flipkart. Last month Amazon Mr. Bezos said that Amazon.in is "the fastest growing marketplace in India". What is the need to sell Flipkart to Walmart? More so, when the company is as young as Flipkart with most of its workforce in the 20s.

India's e-tailer major Flipkart has turned into a private company from a holding firm, ostensibly for a strategic buyout. Back in 2007, Walmart was briefly involved in a joint venture with Indian conglomerate Bharti, but that was for a wholesale model only and the relationship was short-lived. Beyond facing scrutiny by antitrust authority CCI (Competition Commission of India), some believe that the late bid was only meant to make the deal more expensive for Walmart. The report further mentioned that the Bengaluru-headquartered online retail titan was in serious negotiations with these companies past year after it got Dollars 2.5 billion (about 16,800 crore) from Japan's SoftBank group. Walmart India now operates 21 B2B Best Price cash-and-carry stores and one fulfilment centre in 19 cities across nine states in India.

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