Flipkart reported to have approved $15bn stake sale to Walmart-led group

04 May, 2018, 14:13 | Author: Natasha Holloway
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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. SoftBank invested in Flipkart past year through its investment arm SoftBank Vision Fund and held a little over 20% stake in the ecommerce major. Google's parent company Alphabet Inc.is said to be participating in the deal with a $3 billion investment. The deal is expected to close within 10 days, though terms could still change and a deal isn't certain.

After months of negotiations, the United States global retail giant Walmart Inc has been able to strike a deal with Flipkart, India's most valuable startup.

The news underscores how Amazon is focused on winning India's fledgling e-commerce market, and the offer could be a ploy to block Walmart from bringing its expertise in logistics and supply chain management to Flipkart, people familiar with the matter said.

CEO Krishnamurthy is expected to continue in his role, but numerous reports have been pointing to the exit of one of the two founders, Sachin Bansal, who is now the executive chairman of the company.

Flipkart and Alphabet did not immediately respond to requests for comment. TOI first reported Walmart's interest in getting a route to majority at Flipkart in its February 8 edition.

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Sachin Bansal hasn't yet taken a decision on his future or how much stock he will sell in the proposed deal but he is also likely to stay on.

When contacted, a Flipkart spokesperson said, "There have been speculations for the last six months of Flipkart being in and out of negotiations with several parties".

Amazon is believed to have offered Flipkart a higher valuation of about USD 22 billion, along with a break up fee of USD 2 billion, compared to Walmart's USD 18-20 billion valuation of the Bengaluru-based company.

Flipkart had vetoed an approach from Amazon for a 51 to 55 percent stake in the company two years ago, a source told Reuters, judging its offered price as far too low at the time. 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.

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