The wait for Walmart – Flipkart deal is getting longer by the day. Most of the delay is mainly caused by issues arising from one key investor Softbank. The latest one being taxation related hurdle wherein Softbank may have to pay a higher sum in taxes for the multiples it will make from exiting the investment in less than a year.
The Japanese multinational conglomerate founded by Masayoshi Son had acquired 20% stake in Flipkart in August last year. Son's Vision Fund paid $2.5 billion for the stake in the Singapore registered firm that primarily operates in the Indian e-commerce market. In fact, there are apprehensions now that the deal could get further delayed as Softbank may not sell its shareholding for a year at least, to avoid paying a large sum in taxes.
While most market experts see this deal as a significant development for the Indian start-up industry, a section is still wary of its benefits to Walmart, which is paying a huge price for the online marketplace. In fact, it's still unclear what kind of synergies will Walmart derive from this deal in the near or distant future.
Could the numerous hurdles to this deal be a sign for Walmart not to pursue this transaction and burn cash in a company that has only done so (burn cash) since inception? Time will tell.
