But some traders in India are opposed to the deal, fearing its effect on competition. Amazon holds about 27 percent of India's burgeoning e-commerce market, according to Euromonitor, where Walmart only operates 21 cash-and-carry wholesale stores in the country that sell to businesses. But, he adds that going forward, numerous leadership positions at Flipkart will be replaced by Walmart and that the USA company will get its own people to take up these roles within the next 18-24 months.
According to the deal, Walmart's investment is in Flipkart's online marketplace platform, where foreign investment is allowed. Flipkart will be the centrepiece of its global e-commerce ambitions as the full potential of the Indian market is yet to be realized and there is enormous scope for growth. "In announcing the deal, Walmart warned its shareholders that the purchase would reduce its net income by at least $750 million this year and by more than double that amount next year".
Walmart's global reach sprawls across 6,360 stores in about two dozen countries from Argentina to Zambia.
Chennai: Walmart Inc acquired a majority stake in India's largest e-retailer Flipkart Ltd for $16 billion.
"It is not so much about succeeding in India for Walmart because that may or may not happen", said Neil Stern, senior partner at retail consultancy McMillan Doolittle.
The firm also said it would pursue other growth opportunities when they arise. In the 11 years that Walmart has operated in India, it's signally failed to build up its own business.
Gibson Dunn Hong Kong head Kelly Austin is leading a team representing Walmart on the deal that includes white-collar partners Michael Farhang and Joseph Warin, while leading Indian firm Shardul Amarchand Mangaldas & Co is also advising Walmart on the deal.
Iran-Backed Hezbollah Gains Tighter Control Over Lebanon Through "Decisive" Election Victory
Turnout stood at a lowly 49 percent, according to official figures released after Sunday's vote by the interior ministry. An anti-Hezbollah alliance led by Hariri and backed by Saudi Arabia won a majority in parliament in 2009.
Worldwide business contributed less than a quarter to the retailer's total revenue of $500 billion (roughly Rs. 33.6 lakh crores) in fiscal 2018. The deal will cut into Walmart's overall earnings by about 60 cents per share next year.
Recognising the challenges but also identifying the opportunities, Accel eventually made a decision to invest in Flipkart out of its $65 million seed and Series A fund. "With Amazon closing the gap in categories other than fashion, they need Walmart to remain competitive in the long term". Even so, the company would retain clear majority ownership.
Japans SoftBank Group Corp sold its 20 per cent stake, which it had acquired for Dollars 2.5 billion, for about USD 4 billion.
Sachin Bansal, the co-founder of Flipkart will exit the company completely by selling his entire stake of 5.5%.
Chittaranjan Mohanty, an alumnus of Xavier Institute of Management, Bhubaneswar (XIMB) who now runs an online vegetable delivery start-up, Hi Fresh, is all praise of Flipkart's business model and feels the deal will inspire budding entrepreneurs. Walmart's long-term corporate credit rating was affirmed at "AA", S&P said. "As we speak, we have a pipeline of 20 stores and we expect to open 5 stores in the current year and then pick up pace and eventually start opening 12-15 stores a year", Walmart India President and CEO Krish Iyer said.
"If I go back 10 years, its just unbelievable how we started what we did".