Walmart to buy 73% of Flipkart in India's biggest e-commerce takeover
04 May, 2018, 14:17 | Author: Shannon Aguilar
Mint reported on 2 May that Walmart, the world's largest retailer, is in final negotiations to buy a majority stake in Flipkart even as a rival combination of Flipkart and Amazon looks increasingly unlikely. The transaction was completed on April 27, 2018.
Among the investors who sold their shares in this exercise were Shekhar Kirani, Deep Nishar, and IDG Ventures. The deal between the two retail giants may value Flipkart at $20 billion, which suggests Sachin Bansal would get around of $1 billion on his exit. Now, however, with a sale of the company near, it needed to become a private entity in Singapore to avoid regulatory hurdles.
Walmart is on course to announce a $8-10 billion deal to pick up a majority stake in Flipkart over the next few days. Flipkart had then announced that it had cash in excess of United States dollars 4 billion on its balance sheet. Taking this as the base price per share and multiplying it with the number of shares in Flipkart, which stands at around 134.6 million, one can arrive at an estimated valuation of $17.69 billion.
Walmart informed Flipkart it plans to sell shares in an initial public offer (IPO) in three years time. The bid emphasizes the importance of gaining a greater foothold in online sales in India, a market expected to be worth $200 billion a year within a decade.
Factor Daily stated some friendly investors such as Tencent, Microsoft and Tiger Global might not cash out, while Softbank, which holds 20 percent stake, will exit, making $4 billion in the process.
"This buy-back and the subsequent conversion to private company status appear to be part of a series of steps aimed at easing a proposed acquisition by Walmart".
A person familiar with the matter told Reuters that the probability of a Flipkart-Amazon deal was low, and that such a deal may spark competition fears as Flipkart and Amazon dominate India's e-commerce market.
As per both reports, Google's parent Alphabet too will be participating in the deal and will pump in around $3 billion.
In December previous 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.
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