US retail giant Walmart’s USD 12 billion acquisition of India’s biggest e-commerce firm Flipkart is in the final stages and a deal is likely to be announced in the next few days, according to sources. The contours of the deal, which is expected to see Walmart taking nearly 72-73 per cent stake, are being finalised following which approval from the both the boards will be taken, sources privy to the development said. They declined to be identified as the matters are still under discussion and are confidential. Separately, Bloomberg reported that board of Flipkart Online Services has approved an agreement to sell about 75 per cent of the company to a Walmart-led group for about USD 15 billion.
Walmart is likely to buy stakes of multiple Flipkart investors, including that of Tiger Global Management and Softbank to end up with a significant majority holding, sources said. Tiger Global and Masayoshi Son-led Softbank hold about 20 per cent stake each in the Singapore holding company of Flipkart. Walmart will buy the stake in the Singapore holding company, Flipkart Pvt Ltd, that, in turn, holds majority shares in the multiple companies that run various businesses of the e-commerce company Flipkart.com in India.
As a precursor to the deal, Flipkart’s holding company in Singapore has just turned private by buying back over 1.8 million shares worth more than USD 350 million from its minority investors. According to the information filed by Flipkart with Singapore’s Accounting and Corporate Regulatory Authority, that was sourced by data platform Paper.vc, the move values the Bengaluru-based firm at a whopping USD 17.69 billion.
According to market watchers, the decision is aimed at helping Walmart buy stake from a single entity rather than multiple parties. Flipkart had undertaken a similar move earlier this year, following the closing of its Softbank-Microsoft-Ebay deal. There is buzz also that Sachin Bansal, who founded Flipkart along with Binny Bansal in 2007, may quit after the majority stake acquisition by Walmart. Bansals, who are not related to each other, hold about 5 per cent stake each in Flipkart.
However, it could not be confirmed if Sachin Bansal will indeed move out post the deal. Incidentally, Flipkart through its regulatory filing to Corporate Affairs Ministry in India had notified that Binny Bansal has been appointed as additional director of Flipkart Internet Pvt Ltd with effect from April 27 along with Nishant Verman. Sources indicated that the deal with Walmart, which may see participation from Google’s parent Alphabet, would value Flipkart at about USD 20 billion.
According to Greyhound Research, Walmart is expected to continue operating its existing Cash & Carry business in India separately and not merge it with the consumer facing e-commerce business of Flipkart. “We expect Walmart to be in this journey with Flipkart (if the deal does goes through) for the long haul and the one where both parties join hands to bring respective expertise. To give context – Walmart has been sourcing directly from farmers; has great depth in supply chain management warehousing operations – solid pluses for Flipkart,” Greyhound Research Chief Analyst and CEO, Sanchit Vir Gogia said.