Walmart To Acquire Flipkart For Up To US$ 16 Billion
The world’s largest retail chain, Walmart will buy 73% of Flipkart. The deal appears to be imminent as Walmart has prepared to at least US$ 14.6 billion, and as much as US$ 16 billion, in the cash-and-stock buyout of the Indian e-commerce giant. Moreover, Alphabet Inc., the parent company of Google, is said to be ready with a US$ 3 billion investment as well.
According to the report by Factor Daily, one source had valued Flipkart at US$ 20 billion while two other sources said that Walmart had put company’s value at as much as US$ 22 billion. At this price, Walmart will spend more than US$ 16 billion for the acquisition. After meetings went on throughout Thursday, both the parties appear to have signed a tentative agreement. One source said:
Everything has been finalised… The papers have been signed by both the parties.
Flipkart’s CEO, Kalyan Krishnamurthy, and other top-level personnel are expected to maintain their roles. The report cites a few sources, and one of the sources claimed that the deal will be a mix of cash and stock.
Cash component will be close to 55%, which will mark the exit of some of the largest investors in Flipkart.
Softbank, an investor in Flipkart holds a little over 20% stake in the company. With this acquisition, Softbank will exit the company fully and is expected to make up to US$ 4 billion. This is a whopping 60% return on its investment of US$ 2.5 billion in the company it made about eight months ago. Other investors like Tiger Global, Tencent and Microsoft will not cash out completely.
The two major players in the Indian online market are Flipkart and Amazon. If this deal goes through, the scenario will remain the same. Amazon has been breathing down Flipkart’s neck in terms of market share as Flipkart continues to have a larger market share. According to a report by Forrester, in 2017, Flipkart’s standalone market share was 31.9%, while Amazon’s was 31.1%.
With the deal on the later stages of completion, it could be announced at any moment. Neither of the two parties involved in the deal has made any statements so far. We will update you as soon as we get more information about the acquisition.