Walmart to buy 73% of Flipkart in India's biggest e-commerce takeover

04 May, 2018, 14:16 | Author: Kathy Ellis
  • Amazon makes a formal offer to buy 60% of its main competitor in India

The board of Flipkart Online Services Pvt has approved an agreement to sell about 75% of the company to a Walmart Inc. -led group for approximately $15 billion, said a report by Hindustan Times.

In a huge merger on Thursday, reports suggest that United States retail giant Walmart Inc has signed a deal to acquire 73% of controlling stakes of Indian e-retail company Flipkart - a deal that will likely prompt the exit of Flipkart's co-founder Sachin Bansal.

"Flipkart's largest investor SoftBank and Bansal were aligned in pursuing a merger deal with Amazon, which didn't get the backing of the majority shareholders", said a person in the know.

The move, which has been termed one of the biggest acquisitions in the world's second-most populous country, and is the biggest ever by Walmart, would see the retail giant spend at least $14.6 billion (up to $16 billion) in a cash-and-stock buyout. Tech giant Google's parent company Alphabet Inc would also tag along with Walmart for an investment in Flipkart.

In December a year ago, Flipkart Ltd, the Singaporebased parent entity of the Indian e-commerce giant, had bought back shares worth close to $800 million from investors including Tiger Global, Accel Partners, and DST Global. His co-founder, Binny Bansal (no relation) would stay on-according to this report, Walmart only wants one of the co-founders to hang around.

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

Amazon makes a formal offer to buy 60% of its main competitor in India
Amazon makes bid to spoil Walmart-Flipkart deal

Investors, including Shekhar Kirani, Deep Nishar, and IDG Ventures, as also several pension funds are reported to have exited Flipkart through the buyback at $169.31 per share, which pegs Flipkart's valuation at around $17.7 billion.

Tiger Global, Accel, Microsoft, Naspers and Ebay continue to remain on the cap table of Flipkart.

If the deal with Walmart goes through, it would provide Flipkart with more arsenal to go up against Amazon in the Indian market. Walmart is going big on farm to home.

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.

When contacted, a Flipkart spokesperson said, "There have been speculations for the last six months of Flipkart being in and out of negotiations with several parties".

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