Flipkart approves $15 billion stake sale to Walmart-led group

Anna Jefferson
May 4, 2018

According to a Bloomberg report, SoftBank is going to sell over 20 per cent stake in Flipkart at a valuation of $20 billion. The global e-tailer has made a formal offer to buy a 60% stake in Flipkart on Monday, sources said.

A FactodDaily report on Thursday stated that the deal will be a cash-and-stock buyout for around $14.6 billion. Sources also suggest that Google's parent company Alphabet Inc is involved in the deal, with about $3 billion in investment coming from it.

The deal, which will see the USA retail giant buy around 73 per cent of the Indian e-commerce company, was finally sealed on Thursday following months of negotiations. The deal offered by the Jeff Bezos-run company proposed to merge Flipkart entirely with its Indian arm and sought a non-compete agreement with Flipkart's founders for 1-2 years.

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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.

Amazon has offered a US$2 billion breakup fee as part of its bid, the report said. "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". Walmart also plans to develop a grocery marketplace using Flipkart.

The company's largest backers like New York-based Tiger Global, Japan's SoftBank, Accel Partners, Microsoft, South African media and internet group Naspers, and eBay did not participate in the buyback.

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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.

Amazon and Flipkart are locked in an intense battle for leadership in the Indian market and have pumped in billions of dollars towards marketing and setting up infrastructure in the country. Krishnamurthy, who took over as CEO from Binny in January last year, is seen to have turned around the e-commerce major after two sluggish years when it ceded market share to Amazon under the leadership of Sachin.

The acquisition of Flipkart has been a long-drawn out saga that has kept the Indian e-commerce space on edge, but it seems that a deal has finally been finalized.

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