Published: Fri, May 04, 2018
Finance | By Cynthia Curry

Flipkart reported to have approved $15bn stake sale to Walmart-led group

Flipkart reported to have approved $15bn stake sale to Walmart-led group

A Walmart-Flipkart deal could lead to more intense price competition, retail consultants said.

"Everything has been finalised..."

Both the companies have signed tentative agreements on May 3, 2018, and the deal will apparently involve a mixture of cash and stock, with the cash component amounting to around 55%.

In December past year, 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. Amazon, which is Flipkart's biggest rival in India, declined to comment on that report. The buy-back brought about a clean exit of a significant portion of Flipkart's shareholders.

Additionally, Walmart has stated that it intends to sell shares in Flipkart in the form of an IPO in three years.

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

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This could likely be the secondary valuation at which Walmart will invest in Flipkart. Pictured, the Flipkart headquarters in Bengaluru, India, July 7, 2017.

Tiger Global, Naspers, Accel Partners, IDG Ventures and a few other investors are likely to sell their stakes to Walmart in the transaction.

CEO Krishnamurthy is expected to continue in his role, but numerous reports have been pointing to the exit of one of the two founders, Sachin Bansal, who is now the executive chairman of the company.

The TOI report citing sources said Walmart is keen on retaining only one of the two founders. Even as Sachin's exit from Flipkart looks imminent, Walmart is holding on to Kalyan Krishnamurthy, the web retailer's present CEO, sources said. However, Indian laws do not allow foreign direct investments in multi-brand retail. Walmart is going big on farm to home. Flipkart had then announced that it had cash in excess of Dollars 4 billion on its balance sheet. According to Forrester Research, India might become a $200 billion market in a decade, making it the most sought after ground now. Interestingly, Amazon has also been in talks to acquire a majority stake in Flipkart, suggesting the United States company does not want Walmart to enter the Indian market.

Amazon has emerged as new contender for Indian e-commerce giant Flipkart.

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