Walmart expects to officially close Flipkart deal by the end of 2018
The announcement by Walmart comes amidst massive ongoing protests across the country by trade unions which do not want the deal to go through as they feel it will lead to job losses and affect small businesses.
Earlier, bodies like Confederation of All India Traders (CAIT) and All India Online Vendors Association (AIOVA) had moved the Competition Commission of India (CCI) against the deal citing the same reasons.
The current operations at Flipkart will have a negative impact on Walmart’s income, the US based retailer informed Securities and Exchange Commission (SEC) in a regulatory filing.
“In May 2018, the company announced it will pay approximately US $16 billion in exchange for approximately 77 percent of the outstanding shares of Flipkart Group (“Flipkart”). The investment includes US $2 billion of new equity funding. Closing is expected later this calendar year, and is subject to regulatory approval,” the retail giant was quoted by PTI as saying.
“Upon closing and consolidating the financial statements of Flipkart, we expect the ongoing operations of Flipkart to negatively impact fiscal 2019 net income. We intend to fund the acquisition of Flipkart with a combination of newly issued debt and cash on hand,” it added.
Walmart Inc President, CEO and Director, Douglas McMillon, is looking at India in the long term and feels that considering the size of the Indian market gives the firm a tremendous opportunity to grow.
“We’re learning a lot from China. We’ll be learning even more from India. And we basically want to be in places that have a tremendous opportunity, which is what led us to Flipkart in India,” McMillon said.
“In the case of India, it’s worth it. If it had been a smaller market, we may have passed. But this is a unique opportunity. And when you look out 5, 10, 20 years from now, time will tell. But we’re confident that we’ll look back at it and say, Yes, that was a big bet. It was a bold bet. But we’re glad we took it. We’re not running this thing for one year,” he added.
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