Reports and rumors about Walmart acquiring Flipkart go back to a couple of months where Walmart was said to acquire about 40% of Flipkart. A couple of weeks back, it is again reported that Walmart said to acquire 51% stake in Flipkart. Freshly we hear that Walmart might get hold of 73% of Flipkart valued at $16 billion.
Walmart is said to have sealed the deal on May 3rd spending at least $14.6 billion in the cash-and-stock buyout. According to the report, one of the sources said that Flipkart was valued at $20 billion, while other sources said Walmart had put the target company’s value at as much as $22 billion, a price at which it will spend more than $16 billion. In an interesting move, Alphabet, parent company of Google is also said to be participating in the deal with a $3 billion investment.
It is also heard that both the companies have signed tentative agreements after meetings. The sources also confirmed that the deal will be a mix of cash and stock as mentioned above, says the report. “Cash component will be close to 55%, which will mark the exit of some of the largest investors in Flipkart,” sources said.
As for the investors, some of the friendly investors like Tencent, Microsoft, and Tiger Global will not cash out completely. Softbank, which currently holds a little over 20% stake in Flipkart will exit the company fully and is expected to make $4 billion.
JP Morgan Chase as Walmart’s banker, Amarchand Mangaldas are involved in the deal as legal advisors and Bain & Co. as management consultants. Neither of the companies responded to requests for comment. It is also reported that Walmart has told Flipkart’s board that it intends to sell shares of the Indian e-commerce firm in an initial public offer (IPO) in three years time.
Furthermore, CEO Krishnamurthy will continue to helm Flipkart, as Sachin Bansal, the chairman may exit the company as he had no plans to sell any of his shares until last week and was seeking a bigger role, though Walmart wants them to continue to serve.
According to the report, sources claim that “Walmart plans to build food and grocery chains in India and will have huge upsides”. Nothing is official until either of the companies make an announcement, but it should be interesting to see where Flipkart is headed post the acquisition.