Walmart, Flipkart work on synergies; merger may result in common leadership

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With just the formal signatures pending for a deal with Flipkart, Walmart has begun its search for real estate, mostly in Bengaluru, to have synergies with the e-commerce company headquartered there, sources said. 

The American retail major is looking at shifting some critical divisions such as information technology (IT) and e-commerce to Bengaluru from Walmart India’s Gurugram office. The group may even explore relocating the entire Walmart India operation to Bengaluru in the near future. “If Walmart is spending more than $12 billion on acquiring Flipkart, it only makes sense for them to relocate to Bengaluru,” a source said.   

Synergies are being planned on other fronts too. If things go according to plan, Walmart India and Flipkart could possibly have one common leader for both businesses, said a person in the know. It is not certain yet who that leader would be, but one of the Flipkart founders (Sachin Bansal and Binny Bansal, who are not related) could be a possible choice, according to a source. However, if Sachin Bansal sells his stake at a little over 5 per cent and steps down from Flipkart, as reports have suggested recently, either Binny Bansal or Kalyan Krishnamurthy, chief executive officer (CEO) of Flipkart, could be an option for the leadership position.

A similar leadership decision was taken when Walmart acquired American e-commerce major in 2016. Marc Lore, founder of, was appointed Walmart e-commerce CEO. Lore had accompanied Walmart chief executive Doug McMillon and president-CEO of Walmart International Judith McKenna to the Flipkart office in January.

Leading investment banking company Goldman Sachs is learnt to be advising Flipkart on a deal with Walmart, which wants to pick a controlling stake in the Bengaluru firm, valuing it at around $18-20 billion.

While the Walmart leadership had come down to Bengaluru earlier this year, most of the deal talks took place overseas, sources said. It is a very complex process to have one sale agreement with so many investors involved, a banker pointed out. Even Lloyd C Blankfein, chairman and CEO of New York-based Goldman Sachs, has been involved in the numerous rounds of talk.

Others at the deal table, spearheading the multi-billion transaction, include Masayoshi Son, chairman and CEO of SoftBank, the largest investor in Flipkart, Bansals of Flipkart; McMillon, Lore and McKenna of Walmart; Tiger Global Management (investor in Flipkart) partner Lee Fixel; representatives of other investors in Flipkart such as Nasper and Accel; and top executives from JPMorgan Chase, believed to be advisors to Walmart.                 

Currently, Krish Iyer heads the India business of Walmart, which has 21 cash-and-carry stores across the country. The Bentonville-based retail major had begun in India in 2007 in a joint venture with the Bharti group but broke off the partnership in 2013. Also its ambition of entering the Indian retail sector through multi-brand format was thwarted by policy hurdles.  

People in the know said though Walmart wants to make it big in e-commerce, to take on Amazon both in the US and India, it will still wait to enter the big box retail in India once the FDI policy allows it. “Walmart’s way to success is through omni channel — both physical and e-commerce. That is Amazon’s strategy too,” a source said. While the two companies — Walmart India and Flipkart — may remain as two separate entities initially, the American major could do away with the cash-and-carry business subsequently because that format is not in Walmart’s DNA, he added.

As for now, moving some core businesses to Bengaluru may not be tough for Walmart as the group’s centre of excellence, part of Walmart Labs, is in that city.  Walmart had acquired Kosmix, a privately held American company in 2011, to form Walmart Labs, a research division for the group. Its third largest development centre (after the US and Brazil) spread over 250,000 square feet was opened in Bengaluru recently. Flipkart, on the other hand, recently consolidated all its office space in Bengaluru to shift to a campus measuring 830,000 square feet.   

Flipkart and Walmart have not replied to any query related to the proposed deal ever since the talks became public.

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