Published: Fri, May 04, 2018
Finance | By Jaime Brady

Indian unicorn Flipkart's board approves $15 billion deal with Walmart

Indian unicorn Flipkart's board approves $15 billion deal with Walmart

In a move seen as a precursor to U.S. retail giant Walmart acquiring a majority stake in Flipkart, the Indian e-commerce player has bought back shares worth $350 million from investors in its Singapore-based parent to regain private limited status in the country.

Bloomberg also reported that Major shareholder, Softbank will sell it's 20% stack in the company.

An another report by FactorDaily states that Walmart will spend at least $14.6 billion in cash, with the rest expected to be in the form of stock.

This could likely be the secondary valuation at which Walmart will invest in Flipkart. A Walmart-Flipkart deal could lead to more intense price competition, retail consultants said.

After months of speculation, Walmart reportedly reached an agreement to purchase a controlling interest in Indian e-commerce platform Flipkart in a deal valued at somewhere between $10 and $12 billion.

Flipkart's co-founder Sachin Bansal might take an exit from the firm after the much-talked about Walmart's takeover.

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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.

Mint reported on Wednesday that Walmart also wants Flipkart co-founders Binny Bansal (group chief executive officer) and Sachin Bansal (executive chairman) and CEO Kalyan Krishnamurthy to continue in their roles after the acquisition. "Walmart is insistent on retaining only one of the two founders as they fine-tune the deal, said a Times of India report quoting people familiar with the negotiations".

Emails sent to Flipkart and Walmart did not elicit any response.

Walmart would maintain a focus on the grocery market, said the sources, suggesting that nearly 50% of Walmart's initial investment would be funneled into building a food and grocery supply chain.

India is a fast-growing e-commerce market, now worth $27 billion and forecast to grow at 29.2 percent over the next four years, reaching $73 billion by 2022. It is quite a smart strategy by Walmart to take on Amazon. It is expected that the offer is a ploy to block Walmart from bringing its expertise in logistics and supply chain management to Flipkart.

Amazon has emerged as new contender for Indian e-commerce giant Flipkart.

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