Amazon Beaten By Walmart In Battle For India's Flipkart

Walmart-Flipkart deal ‘As substantial value in India tax liability likely to arise

Amazon Beaten By Walmart In Battle For India's Flipkart

Walmart was in advanced talks to acquire 51 percent or more of the e-commerce player for $10 billion to $12 billion, valuing Flipkart at some $18 billion to $20 billion.

Meanwhile, experts fear that the Income Tax department could raise capital gains tax demand on Walmart, triggering a Vodafone-type tax dispute and hurting the valuation of the Flipkart deal for the USA retail chain. This is because Walmart will provide Flipkart with the necessary financial muscle as well as retailing expertise in various areas including marketing and logistics.

In over four years, Amazon India, under its country head Amit Agarwal, has turned into a formidable e-tail giant to take on Flipkart, garnering a 44 per cent customer share and a growth rate 50 per cent faster than competition as on December 2017, offering more than 160 million products on its platform. It has obviously paid from the U.S. $2.5-billion funds it raised from Soft Bank Vision Fund, Microsoft, E-Bay and other investors past year. There have been reports about Sachin exiting Flipkart after the Walmart deal is sealed.

Flipkart's board has approved an approximately $15 billion agreement to sell a 75% interest in the company to a Walmart-led group expected to include Google parent Alphabet Inc. It is worth mentioning here that the American online retail behemoth has already pledged to invest about Dollars 5.5 billion (about Rs 37,000 crore) in India.

According to The Business Standard, the mood at Flipkart's new campus at Bangalore's Embassy Tech Village is very upbeat as employees await news that their stock options have shot up in value, in sync with the mega deal.

With all these developments going on the Filpkart investors SoftBank and Naspers are expected to completely exit Flipkart.

- Bought online apparel retailer Myntra in a deal pegged by sources at about $300 million in 2014, and another retailer Jabong for $70 million in 2016.

Sachin Bansal, Flipkart's Founder, is expected to sell all his shares. Sachin Bansal remained as executive chairman. Tiger Global, whose Partner Lee Fixel has been at the forefront of the negotiations, might retain a nominal stake in the company along with Accel Partners, the earliest investor in Flipkart, and other more recent investors like Tencent and eBay.

Flipkart may have a town-hall for personnel on Friday, with Walmart CEO Doug McMillon likely to wait, one of the sources stated. Sources revealed to Times of India, that Bansal "wasn't aligned with the strategy and operating structure that was being proposed post Walmart coming on board".

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