Flipkart Approves 75% share to Walmart at $20 Billion Valuation

Amazon looking to outbid Walmart in Flipkart deal

Amazon looking to outbid Walmart in Flipkart deal

In a move seen as a precursor to USA 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. Softbank now holds over 20% stake in Flipkart and this Walmart takeover will see them making $4 billion.

According to TOI, Flipkart's largest investor SoftBank and Bansal were aligned in pursuing a merger deal with Amazon, which didn't get the backing of the majority shareholders.

Earlier in April 2017, when Flipkart gained $2.5 Bn funding from SoftBank, the biggest exit was orchestrated by Tiger Global, which made a partial exit selling shares worth over $424 Mn in Flipkart to the Japanese conglomerate.

Event Alphabet Inc., Google's parent company, might a part of this agreement by way of a $3 billion investment. The report claims the deal can't be called certain, and that terms could change in the next 10 days.

While CEO of Flipkart Kalyan Krishnamurthy will reportedly continue in his position, reports also said that co-founder Sachin Bansal may quit. The Times of India report cites a source as saying the companies were working out the sale of Sachin Bansal's shares to Walmart. Sachin Bansal, 36 and Binny Bansal 35, who became friends as colleagues in Amazon had started Flipkart in 2007.

A spokesman for Walmart declined to comment.

Irrespective of the final suitor, the Flipkart buy would be one of the largest deals in the Indian retail sector and by far, the biggest in the country's booming e-commerce market. SoftBank and Tiger Global are the two largest investors in Flipkart, with the likes of Naspers, Accel Partners, and DST Global being the other key shareholders. Flipkart had then announced that it had cash in excess of Dollars 4 billion on its balance sheet.

Walmart and Amazon's interest in gaining share in India comes after both retailers have struggled to grow in China, ultimately losing ground to Chinese e-commerce firm Alibaba Group Holding Ltd.

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.

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