Indian e-commerce firm Flipkart’s board has approved a deal to sell an equity stake of about 75 percent in the company to a group led by Walmart Inc (WMT.N) for about $15 billion, Bloomberg reported on Friday, citing unnamed sources.
Flipkart’s board has reportedly approved Walmart’s offer, which comes just a day after Amazon made its own bid for 60 percent of the company. It’s a devastating blow to Bezos, and it may effectively lock Amazon out of Asia.
Though India has a smaller middle class than China, an explosion in Internet access and smartphone adoption still stands to make India a potentially huge and lucrative market—a report from Morgan Stanley suggests that the country’s e-commerce market could be worth $200 billion by 2026.
Flipkart’s board has reportedly approved Walmart’s offer, which comes just a day after Amazon made its own bid for 60 percent of the company. It’s a devastating blow to Bezos, and it may effectively lock Amazon out of Asia.
Though India has a smaller middle class than China, an explosion in Internet access and smartphone adoption still stands to make India a potentially huge and lucrative market—a report from Morgan Stanley suggests that the country’s e-commerce market could be worth $200 billion by 2026.
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| Flipkart and Walmart |
Where Bezos will go from here is unclear, though his recent competitive push in India suggests Amazon will stick around for the fight. Late last month, the company announced it would build five new warehouses in five cities across the country, digging in even as the competition heats up.
If completed, the deal will give Bentonville, Ark.-based Walmart a leading position in the growing market of 1.3 billion people and a chance to rebuild its reputation online.
Some of Flipkart's main investors - US hedge fund Tiger Global Management, South African tech investor Naspers and venture capital firm Accel - are likely to retain small stakes, the report said.
A final close of the deal is expected within ten days, although deal terms could still change and a deal isn’t certain, Bloomberg reported.
Both the companies have signed tentative agreements on May 3, 2018, and the deal will apparently involve a mixture of cash and stock, with the cash component amounting to around 55%.
Event Alphabet Inc., Google’s parent company, might a part of this agreement by way of a $3 billion investment.
Some people familiar with the ongoing negotiations say that Walmart is looking to keep co-founders Binny Bansal and Sachin Bansal, and CEO Kalyan Krishnamurthy in their roles after the acquisition goes through.
Not only will he be leaving the company’s day-to-day activities, he will also be giving up his seat on the board of directors.
The deal will be closed in 10 days but a few of its terms may be susceptible to change later.
Essentially, SoftBank’s doubled their investment of $2.5 billion in less than a year.
Flipkart’s other investors, like Tencent, Microsoft and Tiger Global aren’t looking to cash out just yet.
The conclusion of this deal will ideally result in one of the largest acquisitions involving an Indian company. It will also be one the biggest acquisition deals by Walmart.
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