Flipkart co-founder Sachin Bansal may quit after Walmart takeover, says report

After being at the helm of the company he co-founded for over a decade, Flipkart’s Executive Chairman Sachin Bansal may hang up his boots if the acquisition of India’s largest e-commerce firm by the US-based retail behemoth Walmart comes to fruition.

According to a report in The Economic Times, Bansal, who had been the longest serving CEO of the e-tailer had no plans to sell any of his holdings until last week and was seeking a bigger role. However, the talks around Sachin moving out of Flipkart with the Walmart deal have started in the last 3-4 days, the daily quoted people familiar with the development.

Sachin Bansal, who holds about 5.5 per cent stake in the Indian e-commerce bellwether is likely to take home more than $1 billion as estimated valuation of Flipkart has been pegged around $20 billion for Walmart buyout.

The decision of Sachin Bansal’s exit may be announced over the next week. According to the report, Walmart has said that it wants the duo of Group CEO Binny Bansal and Flipkart CEO Kalyan Krishnamurthy who have been actively running the day-to-day operations as more critical members to stay back. While Sachin Bansal and Binny Bansal are part of Flipkart’s 10-member board, CEO Kalyan Krishnamurthy is not on the board.

In 2007, former Amazon executive, Sachin Bansal, teamed up with his IIT-Delhi batch mate Binny Bansal, to start Flipkart as an online books seller. Both Bansals began operations out of their Bengaluru apartment.

While Sachin Bansal has serving as the CEO of the company from 2007 to 2016, Binny Bansal took care of the logistics section as the chief operating officer (COO). Binny was later elevated to Group CEO.

On Wednesday, CNBC TV18 reported that the global e-commerce behemoth has made a formal offer to Flipkart to buy a 60 per cent stake. The report added that the deal offered by the Jeff Bezos-run company proposed to merge Flipkart entirely with its Indian arm and sought a non-compete agreement with Flipkart’s founders for 1-2 years. While the financial contours of this new deal on the table are broadly expected to match the Walmart proposal, Amazon is reportedly also offering a breakup fee of $2 billion to underscore its interest. This fee, also called a termination fee, comes into effect if the deal falls through halfway into negotiations.

The regulatory hurdles, however, may put a stop to Amazon’s acquisition plans. Any Flipkart-Amazon deal is likely to come under the scanner of the Competition Commission of India (CCI), given the dominant market share these two entities have grabbed in the e-commerce space – around 70 per cent collectively. So Flipkart’s investors will likely think twice about any such offer.

Walmart’s bid for Flipkart, which is also its biggest e-commerce bet anywhere globally, is likely to boost its online expansion in Asian markets. The Bentonville, Arkansas-based retail major is expected to pump in over $12 billion in Flipkart for a majority stake in the company and this investment is likely to value the Indian unicorn at $18-20 billion. Its entry could also significantly shake up things for Flipkart’s board. The buzz is that the American company could bag four of the 10 seats on the board but the top management is not expected to change.businesstoday