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Co-founder Sachin Bansal quits Flipkart following Wallmart takeover

10 May 2018

The deal values the 11-year old Indian e-commerce firm at Dollars 20.8 billion.

The US$16 billion controlling stake, announced Wednesday, is the largest acquisition yet by the world's largest retailer. Sales growth outside the U.S. once topped more than 10 per cent annually, adjusted for currency moves, but it's less than half that now as sluggish economies, store closures and fierce competition have taken their toll.

In another tweet, biotechnology major Biocon Chairperson Kiran Mazumdar-Shaw said the deal was an endorsement for India's first e-tailing company.

Flipkart sealed the world's largest e-commerce deal yesterday with Walmart, cementing India's place in the global e-tailing league.

As for the PHD Chamber of Commerce and Industry, it said that this deal will lead to new opportunities in the e-commerce sector and its growth. "And there is always a fear that you start with trade and then it becomes control", said Devangshu Dutta, head of retail consultancy firm Third Eyesight.

Walmart, which operates stores under various banners in 27 countries outside the USA, has faced strong headwinds in its expansion.

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"The owner can dictate anything". It's now reportedly considering selling a majority stake in the unit, which includes a dozen different store types that could easily get broken up by a new owner.

But some traders in India are opposed to the deal, fearing its effect on competition.

But will Flipkart's brand image no longer be that of India's homegrown e-commerce startup, a unicorn at that? "These companies have been directly or indirectly participating in pricing and discounting, which is against the policy that seeks to create a level playing field", Retailers Association of India alleged. The deal also calls for Walmart to invest $2bn in equity funding into Flipkart.

A few hours after the Walmart-Flipkart deal was announced, Punit Soni, one of Flipkart's most high profile hires from Silicon Valley who was taken in as Chief Product Officer and quit in just over a year, tweeted that he is, "Happy about Flipkart".

Walmart said it plans to fund the India deal through a combination of newly-issued debt and cash on hand.

He said Flipkart would be run as a board managed company with Walmart acting as a resource centre.

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Accel wrote Flipkart's first big cheque - $800,000 in seed capital back in 2008 - and also went on to invest more than $100 million in subequent rounds.

Interestingly, the co-founder and former CEO Sachin's name was not mentioned anywhere on the official statement released by the global retail chain brand.

Accel: Accel is keeping some of its shares in Flipkart, but the firm will notch one of its biggest exits after almost a decade of sitting tight.

United States west coast firm Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, which has served as outside counsel to Flipkart since 2011, is serving as lead M&A and global counsel to the company on the deal, fielding a team led by partners Andrew Luh, Mark Foster, Steven Baglio, David Sharrow, Jonathan Pentzien and Ferish Patel.

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Co-founder Sachin Bansal quits Flipkart following Wallmart takeover