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Apr, 23 2018

Walmart, Flipkart Stake Acquisition deal Likely to Complete next week

Walmart’s purchase of new equity is likely to value Flipkart at at least $18 billion.

Walmart’s deal to buy a more than 51 percent stake in Indian online marketplace Flipkart could be sealed as early as next week, two sources familiar with the matter said.

The U.S. retail giant has been in talks with Flipkart for months to acquire a controlling stake in the firm as it looks to take on rival Amazon.com Inc head-on in India, a market where e-commerce is tipped to grow to $200 billion in a decade.

SoftBank Group, which owns about a fifth of Flipkart through its Vision Fund, was unwilling to sell a part of its stake as Walmart was offering to buy existing shares at a valuation of $12 billion, a price the Japanese tech investor considered low, earlier reports had revealed, but that stalemate between SoftBank and Walmart has ended. It was not immediately clear though, whether SoftBank had agreed to sell some of its shares in Flipkart.

Walmart’s purchase of new equity is likely to value Flipkart at least $18 billion.

As reported earlier, Walmart completed its due diligence on Flipkart and had made a proposal to buy 51 percent or more of the Indian company for between $10 billion to $12 billion.

Some of Flipkart’s main investors U.S. hedge fund Tiger Global Management, South African tech investor Naspers and venture capital firm Accel are likely to take a full exit as Walmart purchases their shares.

Sachin Bansal and Binny Bansal, former Amazon employees who founded Flipkart in 2007 in India’s tech hub of Bengaluru, are also likely to part sell their stake as part of the deal, one of the sources said.

SoftBank and Tiger Global own little more than 20 percent each of Flipkart, Naspers holds nearly 13 percent stake, Accel 6.4 percent, while the Bansals own just over 5 percent each of the company, according to data from business intelligence platform paper.vc.

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