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

Virginia Carson
May 4, 2018

According to a Bloomberg report, SoftBank is going to sell over 20 per cent stake in Flipkart at a valuation of $20 billion. The US retail giant will buy both existing as well as new Flipkart shares and it is possible that numerous early investors in the company such as Tiger Global, Accel and Naspers maybe selling their entire stakes. SoftBank invested in Flipkart a year ago through its investment arm SoftBank Vision Fund and held a little over 20% stake in the ecommerce major. Walmart and some Flipkart investors, including Japan's SoftBank Group Corp., are yet to agree on the final details and a deal could take at least a month to be signed, the report said. The report claims the deal can't be called certain, and that terms could change in the next 10 days.

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.

The deal, which will see the U.S. retail giant buy around 73 per cent of the Indian e-commerce company, was finally sealed on Thursday following months of negotiations.

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

Alphabet Inc., Google's parent company may also be looking to invest in Flipkart.

The partnership of Flipkart co-founders Sachin Bansal and Binny Bansal is the stuff of modern Indian business legend.

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The approval of the deal with Walmart also means that Amazon's offer to buy a majority stake in Flipkart wasn't accepted by the board.

SoftBank declined to comment.

However, investors such as Tencent, Microsoft and Tiger Global are not likely to exit completely.

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In a resolution Flipkart filed with the Singapore authorities, the company said it would look to acquire its own shares from investors at $131.4 per share. Any Flipkart-Amazon deal would have come under the scanner of the competition watchdog given their dominant market share - around 70 per cent collectively - in the Indian e-commerce market. 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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