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.

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Big Billion Day

The country finally celebrated the success of its maiden mission to Mars, more than two weeks after the event. And how. One of the world’s largest e-commerce sites, that recently started operating in India, showed the way by launching its “Mission to Mars Celebration Dhamaka” (Dhamaka, for the Hindi unfamiliar readers, is equivalent to “blast”, in the celebration sense).

I received an email announcing the celebration, with a “Start here” button prominently displayed to convince the unconvinced. Call me a space nut if you will, but I wasted no time in joining the celebration. I clicked on the “Start here” button without wasting any time.

It was a revelation. Truly “out of the world”.

I could buy books to celebrate the success of the Mars mission or I could buy watches. I could buy Kindles to celebrate the success of the Mars mission or I could buy iPads. I could buy luggage to celebrate the success of the Mars mission or I could buy mobiles. I could buy T-shirts to celebrate the success of the Mars mission or I could buy toys. There was nothing that could not be bought. Brought tears to my eyes. I would never have imagined that the country’s maiden mission to Mars would enable me to buy so many things that I did not need for routine discounts. I am only now beginning to grasp the enormity of the achievement of the Mars mission. I had taken it as a routine scientific mission to Mars to discover new things, validate theories and generally look for ways to further man’s knowledge and frontiers. But it was, clearly, much bigger. Thank you aaaaaa.in.

I placed my order for the shoes and T-shirts that I did not need. I was not going to hold back from celebrating this important milestone in the country’s space endeavours. But before clicking the “Buy” button, I carefully scanned the site for any hints of support for the Mars mission or for future endeavours of the Indian Space Reasearch Organisation (ISRO). There were none. I heaved a sigh of relief. I could buy without fear of paying extra. Don’t get me wrong. I am a strong supporter of the Mars mission. But paying extra for stuff I don’t need? No way.

Expectedly, many others have started walking down the path so selflessly blazed by aaaaaa.in, and launched their own celebrations to mark the historic achievement.

Builders have started asking people to buy property to celebrate the Mars mission. Car-dealers have started asking people to buy cars to celebrate the Mars mission. Restaurants have started asking people to eat more at their establishment to celebrate the Mars mission. TV manufacturers have started asking people to buy TVs to celebrate the Mars mission. There is no stopping the patriotic fervour now.

In fact, in tune with their global aspirations, businesses are understood to be looking for global events to celebrate.

Expect builders to ask people to buy property to celebrate Marin Cilic’s first US Open (tennis) win. Expect car-dealers to ask people to buy cars to celebrate Chelsea’s victory over Arsenal in the English Premier League football. Expect restaurants to ask people to eat more at their establishment to celebrate Stefan W. Hell, Eric Betzig and William E. Moerner being awarded the Nobel Prize for Chemistry. Expect TV manufacturers to ask people to buy more TVS to celebrate the reduction in the US fiscal deficit.

Ffffffff.com, India’s homegrown e-tailing behemoth, and the main competition to aaaaaa.in, went a step further. It launched its own celebration, “The Big Billion Day”.

Billion Day? Rings a bell?

Could they be celebrating the country’s population crossing a billion? Perhaps, but that happened several years back.

Could they be celebrating the presence of more than a billion stars in the firmament? Perhaps, but that has always been the case, even though no e-tailer may have celebrated it.

The distance between Earth and Mars? Possible, given the current flavour, but factually incorrect as the distance is less than a billion.

What else could it be?

It was reported that the company has recently raised a billion dollars for their expansion. Could it be that? Nah, too obvious.

Satisfied that there was no logical explanation for calling it the “Big Billion Day”, I eagerly logged in. It was bound to be fun. With lots of stuff to buy and lots of discounts, what else could it be?

Unfortunately, soon after the “Big Billion Day” dawned, the site crashed. The collective anguish of a billion shoppers could be heard on Mars. The promoters have sent out an email apologising for depriving folks of the joy of shopping for stuff they don’t need and for failing to add to their own wealth.

It was not enough. It could never be. The government has been forced to step in to investigate. They have promised to include the right to shop for stuff that I don’t need, at discounted rates, in the Fundamental rights of citizens enshrined in the Constitution, and protect it through suitable legislation.

The right to shop for stuff that I do not need, at discounted rates.

One of the greatest discoveries of the modern world. Worth protecting.