Finally, Flipkart board approves 75% stake sell to Walmart for $15 Bn

Sean Reid
May 4, 2018

Walmart is on course to announce a $8-10 billion deal to pick up a majority stake in Flipkart over the next few days.

In a move seen as a precursor to U.S. retail giant Walmart acquiring a majority stake in Flipkart, the Indian e-commerce player has bought back shares worth $350 million from investors in its Singapore-based parent to regain private limited status in the country.

SoftBank is the most significant shareholder in Flipkart with a stake of 23.62 percent.

This could likely be the secondary valuation at which Walmart will invest in Flipkart. Tech giant Google's parent company Alphabet Inc would also tag along with Walmart for an investment in Flipkart.

The deal, which will see the U.S. retail giant buy around 73 per cent of the Indian e-commerce company, was finally sealed on Thursday following months of negotiations.

Amazon has offered a US$2 billion breakup fee as part of its bid, the report said.

There has been speculation going on for quite some time that Flipkart and Walmart are in the final stages of their deal. And as per earlier reports, the Japanese internet and investment conglomerate will get an exit of $4 billion for its $2.5 billion investment in Flipkart eight months ago.

Once the acquisition process is complete, Flipkart's Executive Chairman Sachin Bansal may hang up his boots after taking company to new heights in the past 10 years, reports suggest.

The e-commerce major's investors and founders are in favour of the deal with Walmart, according to the sources.

"Walmart may look at bringing in its own private labels via Flipkart to the Indian consumers".

Some of Flipkart's main investors - United States hedge fund Tiger Global Management, South African tech investor Naspers and venture capital firm Accel - are likely to retain small stakes, the report said. It will also be one the biggest acquisition deals by Walmart. However, Amazon was indeed interested in buying Flipkart, said two sources, asking not to be named. The interest of Amazon and Walmart in India could also be because the retailers have struggled to find footing in China, largely because of the presence of local e-commerce players like Alibaba.

India is a fast-growing e-commerce market, now worth $27 billion and forecast to grow at 29.2 percent over the next four years, reaching $73 billion by 2022.

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