IN FEBRUARY 2018, Doug McMillon and other top Walmart officials flew to Bangalore to discuss their new proposal to buy a majority ownership of Flipkart. Doug visited the Flipkart office on Bangalore’s Outer Ring Road, where detailed presentations were made to the Walmart team about Flipkart’s business. Later, senior officials of the two companies also met at the Hilton located within a software park near central Bangalore, a forty-five-minute drive from the Flipkart headquarters. Over dinner, Flipkart paraded its team to the Walmart officials.
This is where Sachin sprung a surprise on his colleagues. Standing next to the Walmart Asia CEO Dirk Van den Berghe, Sachin tapped his glass to get the audience’s attention. He expressed enthusiasm about leading Flipkart in this next phase of its evolution. He said that he and Dirk had held encouraging discussions about the path forward. ‘I want to raise a toast to our partnership. For the next ten, twenty, thirty years, we will rule the Indian market together.’ It was clear to Sachin’s colleagues that he was as resolute as ever to return to the hot seat. His speech was intended to send a message to both the Walmart officials and his Flipkart colleagues; he was making his status as the main man at Flipkart clear to the new owners, and to his colleagues he seemed to be saying that he had the backing of the Walmart leaders. As they listened to Sachin speak, the dozen or so Flipkart executives who were present, exchanged glances, pondering the import of his speech.
Nevertheless, the meetings were productive, a huge step forward.
The Flipkart investors were thrilled by this development. For Lee Fixel, this would be a satisfying conclusion to his long, exacting association with the company. It had seen many highs, but the lows had been the most nerve-wracking experiences of his career. Less than eighteen months ago, Flipkart had been in serious trouble; its survival had been in question. To have come out of this predicament so soon could only be seen as one of the great escape acts in the startup world. Lee became the champion of the deal at Flipkart. His partner in advocating Flipkart’s sale was none other than Sachin, for a very different, but very predictable reason: he was determined to reclaim the title of CEO.
As the Flipkart team was negotiating the minutiae of the transaction with Walmart officials, Sachin spoke directly with Doug McMillon. They had several agreeable conversations about the direction of Flipkart after the sale. As they understood it, Sachin’s involvement was going to be essential.
WHEN A COMPANY is up for sale, it is a norm to conduct an auction in order to extract the highest possible price. And so it was with Flipkart.
In early 2018, Flipkart representatives invited other potential suitors to make an offer. One of these was Alibaba, which was a large investor in Paytm, a rival of Flipkart. Paytm is a mobile payments provider that had also expanded into e-commerce. Stirred by Amazon and Walmart’s pursuit of Flipkart, Alibaba, too, indicated its interest in discussing an investment. However, it soon became clear that Alibaba was keen only on a minority stake. Another complication was the valuation of PhonePe, Flipkart’s payments business that was threatening to overtake Paytm. In deference to Paytm, Alibaba was offering a scanty price for PhonePe, which had become a prized asset for Flipkart. Within weeks, the talks with Alibaba broke down.
Flipkart also relayed Walmart’s offer to Amazon officials. Bezos and his team were shocked. When they had evaluated the possibility of buying Flipkart last year, they had not for a moment believed that any other company would have the audacity and the means to make a rival bid. Flipkart was a hugely unprofitable retail business in a notoriously tricky market. It would require years of patient nurturing before the company could start showing profits. Surely, only Amazon, with its well-established reputation of making risky, long-term bets, could pull off such a deal. Secure in this belief, Amazon’s opening offer had been wilfully inadequate, convinced as it was that the Indian company had no choice but to accept its terms. After learning of Walmart’s interest, the Amazon officials restarted negotiations with Flipkart in earnest.
The two biggest international names in retail were now competing to buy Flipkart.
Still, the Flipkart team was aware of Amazon’s notorious reputation for engaging in discussions just to play spoiler. This time, though, Amazon was quite serious. Jeff Bezos himself hosted Sachin at his house in Seattle. As proof of Amazon’s sincerity, Flipkart extracted a provision that would make Amazon liable to pay a breakup fee of more than $4 billion. This sum would be due to Flipkart in case the two companies signed a merger agreement that later had to be terminated, no matter what the reason.
Sachin had been very excited about the merger with Amazon India. When he had met Bezos, Sachin had pitched the idea that Flipkart should remain independent and continue to be overseen by him and the company’s present management team. The Flipkart team was clearly superior, Sachin had told Bezos. Sachin proposed that Amazon India should continue to exist, but occupy a supplementary, subordinate position. He believed that such a transaction would be a historic achievement for Flipkart, in real and symbolic terms. Not only would the merger yield an extraordinary bonanza, it would be a thumping validation of the local startup ecosystem: an Indian company taking over a promising unit of a global internet conglomerate was considered a fanciful idea.
Despite Sachin’s enthusiasm for a deal with Amazon, the talks had moved slowly. Even as late as March 2018, Amazon hadn’t made much progress in evaluating Flipkart. The Indian firm
