Flipkart nears clinching $12 Bn deal as Walmart concludes due diligence

It seems like Flipkart is nearing to close a $10-12 billion deal with none other than world’s biggest retailer Walmart Inc. The US-based company said to have completed due diligence in the Bengaluru-based company.

The two have been engaged in a possible deal for about past seven weeks.

Walmart is eyeing to grab a little over half of the Softbank-backed company. According to a Reuters report, the retail major has offered a proposal with a shareholding agreement. If the deal gets through, Flipkart is likely to be valued about $20 billion.

The investment will give strong ground to Walmart in Indian e-commerce space which is slated to touch $100 billion mark by 2020. It will also spruce-up retail giant’s position against an old local rival – Amazon in India.

Over the years, Amazon has been eating-up significant chunk of Walmart marketshare on the local ground (the US). The latter will reportedly acquire primary as well as secondary shares in Flipkart.

Importantly, in February this year, many media reports surfaced hinting that Walmart is looking to invest about $5 billion for about 40 per cent stake.

However, now it's eyeing investment in the range of $10-12 billion for about 51 per cent stake in the online marketplace. Flipkart’s backers including Tiger Global Management, Accel Partners, and Naspers will sell their entire shareholding in the company to Walmart, added the report.

Currently, SoftBank owns 23.62 per cent stake in the company while Tiger Global holds 22.44 per cent of preference share capital. South Africa-based media and Internet conglomerate has about 14.57 per cent of preference share capital.

Meanwhile, Amazon also had held early exploratory talks to buy Flipkart. But, the poster child of Indian e-commerce is likely to go with Walmart.

With a multi-billion bet on Flipkart, Walmart is certainly eyeing to build strong anti-Amazon alliances in India. Whether the Flipkart deal with the Doug McMillon-led retail giant will materialise or not, one thing is loud and clear - Flipkart has indeed been a true darling of heavyweights.