Published: Fri, May 04, 2018
Money | By Ethel Goodwin

Flipkart Board Finally Approves $15 Billion Deal with Walmart for 75% Stake

Flipkart Board Finally Approves $15 Billion Deal with Walmart for 75% Stake

Factor Daily reported sources as saying that Walmart, that had put Flipkart's value at at least $22 billion, will be spending at least $14.6 billion in the acquisition.

According to reports that came a few days back, Amazon.com Inc made a formal offer to buy 60 percent of Flipkart, thus complicating Walmart Inc's bid for majority ownership of the Indian online retailer.

SoftBank will sell its 20%+ stake as part of the transaction, while Google-parent Alphabet is likely to participate in the investment. A Walmart-Flipkart deal could lead to more intense price competition, retail consultants said.

Last year, SoftBank Vision Fund had pumped in an estimated Dollars 2.5 billion in Flipkart for about 20 per cent stake in the company.

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.

There are various reasons Walmart decided on Flipkart instead of other players in India's sprawling e-commerce space, such as Snapdeal or ShopClues, the primary being its large logistics network and its capability to withstand an onslaught from Amazon.

While CEO of Flipkart Kalyan Krishnamurthy will reportedly continue in his position, reports also said that co-founder Sachin Bansal may quit.

People familiar with the negotiations said Walmart has been keen on retaining only one of the two founders as they fine-tune the deal. Walmart also plans to develop a grocery marketplace using Flipkart.

Walmart and Amazon's interest in gaining share in India comes after both retailers have struggled to grow in China, ultimately losing ground to Chinese e-commerce firm Alibaba Group Holding Ltd. Some sources have said that Flipkart is valued at over $20 billion.

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.

Amazon's offer could kickstart a new battle between it and Walmart, already fierce retail rivals in the United States. It is expected that the offer is a ploy to block Walmart from bringing its expertise in logistics and supply chain management to Flipkart.

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