Walmart buys 77% of stake in Flipkart at $16 Billion

Mae Love
May 13, 2018

"Therefore, being the controller of the company, Walmart may use the data and other information as per its will and wish and the possibility of compromising the data cannot be ruled out", he said, according to the statement. Co-founder Sachin Bansal sold his 5.9 per cent stake for an estimated $1 billion while eBay India made about $1.1 billion from its 6.55 per cent stake.

SoftBank's Masayoshi Son has still not chose to sell SoftBank Vision Fund's 21 per cent stake stake in India's largest online retailer Flipkart to U.S. retailer Walmart Inc, according to two reports today citing unnamed sources.

Walmart bought 77 percent of Flipkart from existing shareholders, including SoftBank, for United States dollars 16 billion along which included fresh investment USD 2 billion of fresh equity.

Son had "announced" the much-awaited ecommerce industry deal: Walmart's acquisition of an about 77% stake in Flipkart for $16 Bn. The reason for this potential flip-flop is being attributed to a hefty tax burden that a short-term exit from Flipkart will attract for Softbank. The $2 billion profit would be taxed as per Indian law.

Despite this, super markets and hyper markets continue to be prohibited territory to global companies.

As for the deal itself, said CMR, the merger will open up large avenues for synergy and cooperation between WalMart's existing wholesale business in India, and Flipkart's online operations.

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"Online groceries would be where Walmart-Flipkart and Amazon would start focusing going forward", CMR said.

Signed between India and other countries, a Double Taxation Avoidance Agreement (DTAA) ensures investors don't end up paying taxes on income earned from the source country and also in the country of residence.

"Since the deal has a greater ramification on India's retail trade, a closer scrutiny is certainly warranted".

According to Sanchit Vir Gogia of Greyhound Research, the deal would open up Indian opportunities for global Walmart sellers while mom-and-pop (kirana) stores and Flipkart's private labels could reach a global market via the USA retailer.

SoftBank may hold the Flipkart stake for 6-12 months with a view to avoid the short-term taxation problem, the report added.

Walmart CEO Doug McMillon, in a town hall meeting on Thursday, reportedly told Flipkart employees that Steuart Walton, the grandson of Walmart founder Sam Walton, Judith McKenna, the president at Walmart International, and Dirk Van den Berghe, regional CEO of Walmart Canada and Asia, will join the Indian firm's Board.

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