Walmart had been eyeing a stake in Flipkart for over two years, but things picked up pace only in the last six months, after the US retail giant got the backing of its board to go for majority ownership.

The biggest thing that went in favour of the deal — other than the opportunity to enter the retail space in a growing market — was that the Walmart bosses realised there is much similarity between the cultures of the two companies.

According to sources closely involved in the deal, Walmart was rather wary — in the past, it has acquired companies overseas only to realise later on that the cultural differences are impossible to overcome.

“Initially, Walmart had met the Bansals of Flipkart with the idea of picking up a minority stake,” recalled a source aware of the conversations. “It went back and forth for a couple of years. But it started taking shape about six months back, when the Walmart CEO flew down from Bentonville (Arkansas) and met the Bansals in Bengaluru.”

“When the proposal to pick up a minority stake was put before the Walmart board, they thought it would be better to take control of Flipkart and then run it under Walmart,” said another source. “The Bansals were already looking for a strategic investor so it worked well for both.”

Leadership wins

According to another executive, who is close to one of the deal advisors, what struck the Walmart leadership was Binny Bansal and Sachin Bansal’s simplicity in outlook and work approach. “The Walmart team found the Bansals to be very down-to-earth and informal. They found it very similar to their own work culture and that is very important for businesses when it comes to mergers and acquisitions,” the source said.

“When Walmart looked into Flipkart, they realised that they do not have to change much to bring it in line with their style of functioning. While the market opportunity and growth potential certainly were an important factor for the deal, the synergies between the two was the clinching factor,” said the source.

The first source said that Walmart had looked at other Indian e-commerce players too, but did not find the synergies. “Most of the talks with other Indian players did not go beyond one meeting. With Flipkart, it was an ongoing conversation that started with the intent of picking up a minority stake but gradually moved up to Walmart picking up a controlling stake,” the source said.

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