Employees at Myntra and its parent, Flipkart, are cautiously optimistic about the proposed Walmart-Flipkart deal, which could be the largest cross-border M&A deal in India. The world's largest retail chain, Walmart Inc, is said to be close to picking up a significant majority stake in Flipkart, India’s largest e-commerce firm and most valued consumer internet firm, for a valuation of a whopping $20 billion to $22 billion.
At Myntra, which was acquired by Flipkart for about Rs 2,000 crore in 2014, the mood is definitely more upbeat than it was four years ago. In 2014, when Flipkart acquired online fashion retailer Myntra, Myntra employees were worried about the impact on their jobs as Flipkart also had a fashion business. The fears were quickly put to rest and under the terms of the deal agreement, both Myntra and Flipkart’s fashion businesses operate as separate entities. The latest transaction, however, has upped the excitement level at Myntra.
“People are excited; they are looking at this transaction as an opportunity to cash out their employee stock ownership plan (ESOPs),” a Myntra employee told Fortune India, requesting anonymity. According to the employee, people believe Walmart will take note of Myntra’s numero uno position in the online fashion space and continue the focus on the business.
While it is still not clear who between Amazon and Walmart will finally seal the deal with Flipkart, the general perception amongst the employees is it will be Walmart. According to a FactorDaily report on Thursday, Walmart sealed the deal on May 3 to acquire 73% of Flipkart, for nearly $14.6 billion in a cash and stock transaction. Amazon has also made an offer to acquire 60% in Flipkart, according to separate media reports. Fortune India could not independently verify these bids.
Flipkart employees say while they are not getting any information on the transaction from the company, multiple media reports through the day are hard to miss. “There is excitement but also uncertainty, especially in departments like inventory management and categories management where we do not know how Walmart plans and policies will change things. Also, will the management move to Walmart’s office in Gurgaon?” a Flipkart employee told Fortune India, requesting anonymity. The employee added that while the middle management and employees were relaxed about retaining their jobs, there was uncertainty about what would change.
Flipkart, which started in 2007 by Sachin Bansal and Binny Bansal, is the one of the most storified new age internet consumer companies over the last one decade. Touted as India’s answer to Amazon, with which it competes fiercely in India, it has raised nearly $6 billion from investors such as Accel Partners, Tiger Global, Naspers, Morgan Stanley, and SoftBank, among others.
An exit for the investors from Flipkart at a valuation of $20 billion to $22 billion will help the overall startup ecosystem, say investors. One of the major missing pieces in the Indian startup ecosystem has been exits. Anil Joshi, managing partner at Unicorn India Ventures, a venture fund, says the Flipkart deal will reinstate the trust of investors, limited partners (who invest in venture capital and private equity funds), entrepreneurs, and global markets towards India and startups.
“Flipkart signifies one full cycle of a startup coming to fruition in India. This one deal will change mindsets, it will put India on a different map and boost the confidence in the Indian startup ecosystem,” says Joshi.
Young entrepreneurs, on the other hand, see this transaction as a milestone that will inspire several of them to do their best.
“Considering how India has come to position itself as a global leader which is now evident globally, from Mountain View to Davos, I think this deal will be one of the most important milestones in this journey of our country standing up to becoming a true startup nation in the near future,” says Saket Modi, co-founder and chief executive, Lucideus Tech.
Meanwhile, employees at both Myntra and Flipkart are not too perturbed by media reports that Sachin Bansal, Flipkart's co-founder and chairman, may quit the company’s board after the Walmart transaction.
“Over the last one week, we had been hearing that one of them (Binny and Sachin) will not be there after the deal,” said the Myntra employee cited above.
In the meantime, according to an ET report on Friday, Walmart wants Binny Bansal, Flipkart’s group chief executive, and Kalyan Krishnamurthy, Flipkart chief executive, who have been actively involved in running the company, to continue.