US retailer Walmart to seal Flipkart deal by June-end

Walmart

US giant retailer Walmart will close Flipkart acquisition deal by June-end this year.

Walmart will buy both new and existing Flipkart shares, with the new shares expected to value the Bengaluru-based firm at least $18 billion, said Reuters exclusive report quoting sources close to the development.

Last week, Entrackr had also reported about the due deligence on Flipkart by US retailer, that has proposed to acquire 51 percent or more of the Indian company for between $10 billion to $12 billion.

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

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. Recently, Amazon has upped the ante and offered breakup fee of around $2 billion in the Flipkart-Walmart deal.

Over the years, Amazon has been eating-up significant chunk of Walmart marketshare on the local ground (the US). Last year in the US, Amazon also bought high-end grocer Whole Foods Market for $13.7 billion.

For years, Walmart wanted to enter India but has remained confined to a ‘cash-and-carry’ wholesale business. At present, it operates 21 stores in India.

India e-commerce market is slated to cross $50 billion in 2018. Both Flipkart and Amazon have been in fierce battle against each other to grab the larger pie of it.

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