Post Walmart deal, Flipkart's ESOPs valued at $2 billion

Post Walmart deal, Flipkart's ESOPs valued at $2 billion

Post Walmart deal, Flipkart's ESOPs valued at $2 billion

The value of the employee stock options would be around $1 million each, said an Economic Times report, which also suggested that the USA retail giant may look to buy back all such shares owned by Flipkart staff, thereby making them rich by at least a million United States dollars. This brings an end to the era of Sachin Bansal and Binny Bansal in Flipkart.

The biggest buyout deal of Walmart has boosted ESOPs (employee stock ownership plans) of Flipkart to a total of $2 billion.

He will now sell his £740 million stake in the company just as Walmart acquires a 77 per cent stake in Flipkart. Offline retailers, which are trading at much lower valuations, could see a jump in their share price in the near term because of this deal, the ET report said citing analysts.

Walmart plans to publicly list Flipkart in a four-year period.

L Badri Narayana, partner at law firm Lakshmikumaran & Sridharan, had explained, "In the case of SoftBank US's share transfer to Walmart, the withholding tax, depending on the time they were held, is likely to be 10%".

On the other side, Flipkart too would benefit from Walmart's know-how and expertise in retail infrastructure management, marketing, supply chain and logistics, it added. "It is pretty clear that this (deal) is good for customers and would create jobs and help society", he said at a select media roundtable in New Delhi. Whenever there is an M&A, a little bit of shiver is felt, but that does not shake up sturdy businesses.

"Whenever, there is a large acquisition with some perceived risk by a large company - and of course there is risk in all business - shares of that company goes down". This is expected to not only instill renewed interest among global investors wanting to invest in the India startup story, but also foster a new wave of entrepreneurship. There is such a large exposure (of $16 billion).

The US company will be able to tap its current 21 stores in India for the online market and as warehouse locations for delivery, complementing Flipkart's network.

"Given the deep pockets that both Walmart and Amazon have, they will commit to further investments to command the market".

Besides, "it is much more hard for the government to control and regulate foreign owned platforms particularly in e-commerce sector which has no boundaries", Khandelwal said. "We believe there is huge growth potential for e-commerce in India and significant opportunity for multiple players to succeed in India's diverse, domestic market", the statement said.

SoftBank, a major shareholder in Flipkart with a almost 23.6% stake which it bought for $2.5 Bn just previous year, has about 10 days to decide whether or not it wants to sell its stake and, if yes, how much.

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