Flipkart-Walmart Deal Done, But is SoftBank Doing a Flip-Flop?

Gladys Abbott
May 13, 2018

Walmart Chief Executive Doug McMillon said Flipkart group, in which the United States retailer is acquiring 77 per cent stake, would continue to operate as a separate board-managed company with co-founder Binny Bansal as the CEO.

The acquisition of the majority stake makes the $500-billion Walmart the largest shareholder of Flipkart group and will help accelerate its mission to transform e-commerce through digital technology.

After selling his stake and exiting Flipkart, an emotional Sachin took to Facebook to speak his mind on cutting his links with "Flipsters".

Walmart's official statement clearly stated, "Walmart will pay approximately $16 billion for an initial stake of approximately 77 percent in Flipkart, formally Flipkart Private Limited". The $2 billion profit would be taxed as per Indian law.

Now he's chose to leave the company, sell his stake in it and let co-founder Binny Bansal, who is no relation to him, control everything. At present, the market value of the company is $20 billion. "Plans are on track", Walmart India president and CEO Krish Iyer said.

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When contacted, a SoftBank spokesperson declined to comment.

Is SoftBank, now Flipkart's biggest stakeholder, planning to do another flip on the recent Walmart-Flipkart deal?

"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. "Soft-Bank's fund is registered in Jersey [USA] and they are suffering a huge tax liability because there is no DTAA protection with Jersey", said the source.

Flipkart founder Sachin Bansal has made the shocking decision to leave the ecommerce company. While this proves that Indian businesses are capable of offering stellar exits to investors, it also shows that the country has not been able to sustain local corporate champions.

SoftBank may hold the Flipkart stake for 6-12 months with a view to avoid the short-term taxation problem, the report added. "Following the close of the transaction, we also will be ending our current strategic relationship with Flipkart, which includes unwinding our commercial agreements with Flipkart and terminating Flipkart's license to use the eBay.in brand", said the company in a statement. He has already met with representatives from Alibaba and Walmart as well as Jeff Bezos, founder and CEO of Amazon, in this regard, according to media reports.

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