Walmart Inc., the largest retailer in the world, is about to acquire a $ 15 billion majority stake in Flipkart.
The deal whereby some of Flipkart's biggest investors will outsource their shares In the country's largest e-commerce company, today could be announced every day, sources with direct knowledge of the development.
Japan's SoftBank Group Corp. and Tiger Global Management reportedly sell almost all of their approximately 20% stake in Flipkart.
Walmart is likely to end up with 60% to 80% of Flipkart and estimates the company at about $ 20 billion, they said.
Flipkart was estimated to cost about $ 1
The deal will help the US retail giant – which has led consumers to online platforms like Amazon's – to reach the world's fastest-growing economy with a market of 1.3 billion people. The Flipkart model would help the stationary retail giant to take over its global rival Amazon.
For Flipkart, the deal would give him extra capital and retail muscle to fight Amazon.
Together, Flipkart and Amazon control the majority of the $ 30 billion Indian e-commerce market, which Morgan Stanley estimates will grow to $ 200 billion by 2026
emails sent to Walmart and Flipkart were left unanswered. A SoftBank spokesman said in an email statement, the company does not comment on ongoing discussions or speculation.
Amazon is also said to have made an aggressive offer to buy 60% Flipkart, but the board of the Indian company is It is reported that Sachin Bansal, who founded Flipkart together with Binny Bansal eleven years ago, could leave the company, by selling his over 5%. However, this could not be confirmed independently.
South African Nasper Ltd is the largest shareholder in Flipkart after SoftBank and Tiger Global. Together with other existing shareholders, Tencent Holdings Ltd and Microsoft Corp., it is expected to retain small shares in Flipkart following the Walmart deal.
SoftBank, which had invested $ 2.5 billion in Flipkart, had previously pushed for a rival Snapdeal's merger. com with Flipkart. The deal fell apart after Snapdeal's founders decided against the deal. The Japanese conglomerate has already written off its investment in Snapdeal.
Softbank went into Flipkart last year and invested in it.
The deal with Walmart will include both primary and secondary shares, it said.
One of the individuals said that a possible review by the Competition Commission of India (CCI) as well as risks associated with the passing on of competitive data in due diligence are some of the reasons for Flipkart investors and management to make a deal with Walmart and not Amazon advocate The offer of the rival was slightly higher.
Amazon is reported to have offered Flipkart a higher valuation of about $ 22 billion, along with a $ 2 billion resolution fee, compared to Walmart's $ 18-20 billion valuation from the Bengaluru-based company. 19659002] According to Greyhound Research Chief Analyst and CEO Sanchit Vir Gogia, Walmart will add Flipkart to his kitten, which will be like a shot in the arm and give him a significant edge over his primary competition, Amazon.
"Flipkart shareholders can also achieve better results (as part of the contract with Walmart), and the founders and key management get a greater stake in the game as they rely more heavily on running successfully when the deal with Walmart It would provide Flipkart with more arsenal to compete against Amazon in the Indian market.
Amazon and Flipkart are in an intense battle for the Indian market, they have played a leading role and spent billions of dollars in the Indian market Marketing and infrastructure development pumped in the country.
Amazon has pledged $ 5 billion for its operations in India and Amazon CFO Brian Olsavsky said on a recent investor call that the company would continue to invest in India as " see great progress "from both the sellers and the customers here, though the American e-tail ing-giant had to post a loss of $ 622 million from international business in the first quarter of 2018.
The US fund house Valic, which holds approximately 4,502 shares in Flipkart, and the Vanguard World Fund, which holds four shares the e-commerce company's valuation is between $ 15 billion and $ 19 billion. Flipkart was last estimated at about $ 12.5 billion last year when it raised $ 2.5 billion from Masayoshi Son's SoftBank.