Nearly a year after announcing the acquisition of Flipkart in a $16 billion deal, Walmart chief executive Doug McMillon is in Bengaluru to take stock of the progress made by the homegrown e-commerce giant.McMillon is expected to meet the company's senior leadership, and hold a townhall meeting with its employees later today, Business Standard reported Tuesday.
McMillon's visit comes at a time when Flipkart is battling Amazon for dominance in India's e-commerce market, apart from facing an impending threat from Mukesh Ambani's Reliance Industries which is preparing to debut its own online marketplace in the country.
Flipkart and Amazon are also facing regulatory challenges with the Indian government changing the norms for foreign direct investment (FDI) in e-commerce in a bid to favor domestic players in the country. During the company's earnings call last month, McMillon had said it was disappointing that the Indian government had changed the e-commerce FDI norms without consultation and had hoped for a more collaborative process in the future.
The Flipkart Premium
Walmart had entered into a definitive agreement to buy a 77% stake in Flipkart for $16 billion in May last year, with the deal being closed in August once the Bentonville, Arkansas-headquartered retailer received the necessary regulatory approvals.
However, in a filing with the US Securities and Exchange Commission (SEC) last month, the retail giant had disclosed that it had attributed 77% of Flipkart's $24.1 billion in assets to intangibles and goodwill, highlighting the premium paid by the company.
Walmart said $5 billion in Flipkart's assets were intangibles while $13.6 billion was goodwill as part of its purchase price allocation exercise, which it said was still preliminary due to certain tax items.
The company also added that Flipkart constituted approximately 2% of its total assets as of January 31, after excluding goodwill and intangibles, and 1% of its net sales for the year ended that date.
PhonePe Hive-off
Digital payments company PhonePe had also received in-principle approval from Flipkart's board to be hived off as a separate entity, paving the way for the company to create an independent board and raise fresh funding from external investors, ET first reported last month.
The Bengaluru-based firm is looking to raise up to $1 billion in external capital, people close to the matter had told ET at the time.