Published: Fri, May 04, 2018
Money | By Hannah Jacobs

Flipkart Approves 75% share to Walmart at $20 Billion Valuation

Flipkart Approves 75% share to Walmart at $20 Billion Valuation

Walmart Inc. clinched a deal Thursday to acquire 73 percent of e-commerce company Flipkart, which is now one of the biggest players in Indian market.

The sources indicated that Walmart had valued Flipkart at between $20 and $22 billion.

The report further states that Walmart will spend at least $14.6 billion in cash, with the rest expected to be in the form of stock. Tech giant Google's parent company Alphabet Inc would also tag along with Walmart for an investment in Flipkart.

"Everything has been finalised..."

Meanwhile, Flipkart has bought back $350 million worth of shares from its investors as it seeks to convert its Singapore-incorporated company to a private limited firm.

The source told Factor Daily, "That has already been discussed as part of the deal talks".

Earlier this week, Inc42 reported that Flipkart has set aside $400 Mn to buyback shares of minority investors. Pictured, the Flipkart headquarters in Bengaluru, India, July 7, 2017.

Besides the grouse of being left out of the loop on such a crucial transaction, the sellers also fear that Walmart may look at bringing in its own private labels via Flipkart to the Indian consumers, adding to competitive pressures. It had invested $2.5 billion in Flipkart in 2017, when the company had a lower valuation.

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 publication mentioned that Walmart has been keen on retaining only one of the two founders as they finalize the deal. However, Indian laws do not allow foreign direct investments in multi-brand retail. It will also be one the biggest acquisition deals by Walmart. "It is important for food safety", the source said.

The world's largest online retailer has been pouring billions of dollars into India to ship goods to shoppers faster, contributing to growing losses internationally. According to Forrester Research, India might become a $200 billion market in a decade, making it the most sought after ground now.

The Amazon bid offers a breakup fee of $2 billion, while the Walmart offer includes the buyout of over 80% stake. Krishnamurthy, who took over as CEO from Binny in January last year, is seen to have turned around the e-commerce major after two sluggish years when it ceded market share to Amazon under the leadership of Sachin.

Like this: