Walmart has been in talks with Flipkart regarding a stake for quite some time
The stake in Flipkart allows Walmart to have a strong base in the Indian market
Walmart's entry into India as well as the online space helps it take on Amazon as well
The acquisition of Flipkart has been a long-drawn out saga that has kept the Indian e-commerce space on edge, but it seems that a deal has finally been finalized. The front-runner for the acquisition, Walmart has concluded a deal to purchase a 73 percent stake in the Indian e-commerce company, with the total valuation of Flipkart touching between $20-22 billion, as reported by FactorDaily. According to the valuation, Walmart will be paying between $14-16 billion for its stake in the company.
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. Sources also suggest that Google’s parent company Alphabet Inc is involved in the deal, with about $3 billion in investment coming from it. Additionally, Walmart has stated that it intends to sell shares in the company in the form of an IPO in three years.
Now., Bloomberg reports that Flipkart board has approved Walmart’s offer to acquire 75 percent of the company at a valuation of $15 billion. The report adds that Softbank is exiting the e-commerce startup by selling its 20 percent stake in the company and the final deal is expected to close in the next 10 days.
Kalyan Krishnamurthy is expected to stay on as CEO of Flipkart post the deal, while co-founder Sachin Bansal is expected to exit the company in all capacities including his seat on the board of directors after the takeover. Flipkart’s other co-founder Binny Bansal, who isn’t related to Sachin Bansal, could remain on in some capacity as Walmart is said to be keen on retaining only one of them.
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Flipkart has a large list of investors, and most of them are said to be open to the deal with Walmart. The company’s biggest single investor is SoftBank, which has been said to have apprehensions regarding the deal and has encouraged an offer from Amazon. The current deal with Walmart will see SoftBank exit from Flipkart entirely, with its 25% stake fetching it about $5 billion in value, much more than the $2.5 billion invested less than a year ago.
The deal will be one of the largest acquisitions involving an Indian company. Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal. The site initially sold books online, but eventually expanded into a wide range of products. With a 40 percent market share in the e-commerce space in India, Flipkart is the second largest e-commerce player in the country after Amazon India. An offer from Amazon India would have likely run into hurdles due to concerns of anti-competitiveness, and Flipkart’s investors have likely favored a deal from Walmart for this reason.