Walmart’s Flipkart buyout inches closer as e-commerce giant makes this change in Indian holding company

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Updated: May 7, 2018 11:19:37 AM

India's e-tailer major Flipkart has turned into a private company from a holding firm, which could help in its strategic buyout by global retail giant Walmart. 

Flipkart-Walmart deal: India's e-tailer major turns into private company for strategic buyoutFlipkart-Walmart deal: India’s e-tailer major turns into private company for strategic buyout.

India’s e-tailer major Flipkart has turned into a private company from a holding firm, which could help in its strategic buyout by global retail giant Walmart. Flipkart Pte Ltd, which is registered in Singapore, said that its India’s holding company has become a private firm, IANS reported. The report added that this step appears to be a part of series of steps aimed at easing a proposed acquisition by Walmart.

“The buyback 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,” Chennai-based business analyst Vivek Durai told IANS. The $12 billion acquisition of Flipkart by Walmart is in the final stages and the deal is likely to be announced in the next few days, PTI reported quoting sources.

Walmart is expected 72-73% stake in Flipkart. Flipkart had bought back over 1.8 million shares worth more than $350 million from minority investors last week. Walmart is likely to buy stakes of multiple Flipkart investors, including that of Tiger Global Management and Softbank to end up with at least 60% holding.

If the Flipkart-Walmart deal is successfully sealed, it would be the largest deals in the Indian retail sector so far. Even as Flipkart-Walmart inched closer, Flipkart’s rival in the Indian market Amazon made a formal offer to pick up a 60% stake, CNBC-TV18 reported last week. A Bloomberg report said that Flipkart’s board had seriously considered Walmart and Amazon as potential partners, but ultimately decided on Walmart.

Meanwhile, traders’ body CAIT demanded scrutiny of the proposed Flipkart-Walmart deal, claiming that it will promote loss funding and predatory pricing in the e-commerce sector, PTI reported. It also alleged that Walmart after failing to enter India in retail sector through FDI has chosen e-commerce route, which will be quite harmful to the trading community.

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