Mergers and Acquisitions – Part 2

Much as we admire the government’s handling of mergers and acquisitions, as we saw in the last post titled Mergers and Acquisitions, the government has a lot to learn from private businesses on the right way of doing mergers and acquisitions.

Take the case of the recent acquisition of Flipkart, India’s largest online retailer, by Walmart. Excuse my ignorance, but I was honestly not aware of the real reasons behind Walmart’s acquisition of Flipkart for USD 16 billion, the largest e-commerce deal in the world. Ever. 

Because they can, is what I had always put it down to, when news of this event had first surfaced, barely giving a second thought to what the real reason might have been. Till I was enlightened by several articles in April and May this year, like one titled “Walmart-Flipkart: How will you benefit” in MSN Money.

Benefit? Me? USD 16 billion? They did it for me? Unbelievable.

As opposed to mergers of government entities that have absolutely no impact on the common man, private businesses, it emerges, are competing hard to merge and acquire for the good of the common man. Yes, for you and me.

Now, I am the first to admit that I have been quite critical of corporate actions being at odds with their stated intentions. But Walmart bought Flipkart for me? I still can’t believe it. But the evidence is overwhelming.

Through the various articles I came across during that period, I learnt that Walmart bought Flipkart for USD 16 billion in order to serve customers, support job creation, small businesses, farmers, and women entrepreneurs.

I learnt that Walmart bought Flipkart for USD 16 billion to partner to create sustained economic growth across agriculture, food, and for extensive job creation through development of supply chains, commercial opportunity, and direct employment.

I learnt that Walmart bought Flipkart for USD 16 billion to support the ‘Make in India’ programme of the government, through direct procurement as well as increased opportunities for exports through global sourcing and e-commerce.

I learnt that Walmart bought Flipkart for USD 16 billion to partner with Kirana (mom and pop grocery) store owners and members to help modernise their retail practices and adopt digital payment technologies. They will also support farmers and develop supply chains through local sourcing and improved market access.

I learnt that Walmart bought Flipkart for USD 16 billion so that the Indian consumer base – a huge chunk of which is the middle class, gradually moving to lower middle – can benefit from cheaper prices through Walmart’s playbook, which has seen success across the world.

Silly me.

I had always thought Walmart bought Flipkart for USD 16 billion because executive incentives are aligned to phantom metrics that reward not shareholder value creation but short term revenue spike.

I had always thought that Walmart bought Flipkart for USD 16 billion because companies take advantage of their over-valued stock to make an acquisition while their currency is strong.

I had always thought that Walmart bought Flipkart for USD 16 billion because of the vanity of decision makers.

I had always thought that Walmart bought Flipkart for USD 16 billion because of fear of competition stealing a march over them.

I had always thought that Walmart bought Flipkart for USD 16 billion to become a giant in the space it operates in and makes its owners rich beyond belief.

But I could not have been more wrong. It was me all along. They bought Flipkart for me.

“Everything I do, I do it for you”…sang Bryan Adams.