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Paytm, Flipkart effect! E-commerce market sees M&A deals worth $2.1 bn in 2017

If the Walmart-Flipkart deal indeed goes through, it would be the largest so far in the Indian e-tailing market that is forecast to grow to USD 200 billion by 2026.

twitter-logoBusinessToday.In | May 7, 2018 | Updated 12:00 IST
Indian e-commerce market inked merger and acquisition deals worth USD 2.1 billion in 2017

India's e-commerce industry inked as much as USD 2.1 billion worth of merger and acquisition transactions in 2017, data from Grant Thornton showed. The e-commerce industry saw 21 deals worth USD 2,112 million in 2017 with participation from players like Paytm and Flipkart. However, number of transactions and value was lower compared to 2016 which witnessed deals worth USD 2,224 million in 18 transactions.   

The data showed that in the January-April 2018 period, six transactions worth USD 226 million were seen. The industry is expected to witness its largest-ever deal in 2018 - the proposed Flipkart-Walmart. If the Walmart-Flipkart deal goes through, it would be the largest so far in the Indian e-tailing market that is forecast to grow to USD 200 billion by 2026 (Morgan Stanley estimate).

Speaking on India's merger and acquisition industry, Grant Thornton Executive Director Vidhya Shankar said that the M&A market is here to stay and the 'frequency of purchases will increase'. He also talked about the proposed Flipkart-Walmart deal and said that the US-retail giant has a record of entering into areas and markets through acquisitions. "India is a long term play and it is therefore important (for Walmart) to get a foothold in the online segment," Shankar added.

The talks between Walmart and Flipkart are in the final stage and a deal is likely to be announced in the next few days. Reports suggest that Walmart will pump in about USD 15 billion along with Google's parent Alphabet to pick up majority stake in the company, valuing the Indian e-tailer at a whopping USD 20 billion.

Flipkart has recently concluded a USD 350-million buyback in Singapore to go private, pegging the valuation at over USD 17.6 billion. Market watchers say the decision paves way for Walmart to buy stake from a single entity rather than multiple parties. Flipkart had undertaken a similar move earlier this year, following the closing of its Softbank-Microsoft-Ebay deal.

The deal is also being watched closely as it will set the tone for consolidation in the sector in many ways. On Sunday, Confederation of All India Traders demanded scrutiny of the proposed Flipkart-Walmart deal, claiming that it will promote loss funding and predatory pricing in e-commerce sector. In a statement, the traders' body said: "It is really unfortunate that in spite of having a clear FDI policy, foreign companies are finding an escape route, whether it is in retail or e-commerce."  

The traders' body took a strong objection to the Walmart-Flipkart deal and demanded the government to form a regulatory authority for e-commerce and till the authority is formed, no such deal should be allowed.

(With inputs from PTI)


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