Flipkart

Walmart sells $16bn bonds to finance Flipkart acquisition

Flipkart

If you thought it would be that easy for a multi-billion company like Walmart to acquire Flipkart, you underestimated the size of the $16 billion deal. It appears that Walmart bit more than it can chew.

The Arkansas-headquartered multinational retail corporation has sold $16 billion of bonds to help finance their Flipkart acquisition. Walmart has offered both fixed rate bonds and floating rate notes.

Last month, after a lot of media speculation, Walmart announced to acquire 77 per cent stake in Flipkart for a whopping $16 billion. The remainder of the business is held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.

Following the deal, the multinational retailer may invest $2-3 billion in Flipkart to take on other e-commerce players in India.

Walmart has been eyeing the Indian market and had been doing background preparation before finalising the deal. For instance, just a week before the announcement of the deal, Walmart sold a controlling stake of its British business, Asda, to a competitor for $10 billion.

The deal has increased the pressure on the company. The investment strategy of using borrowed money to increase the potential return of an investment, or leverage, will rise to about 2 times EBITDA. The debt will jump by more than $10 billion.

The new figures have also caused a change in behaviour of market analysts towards the company. S&P Global Ratings is planning to downgrade the company’s AA ratings due to its “aggressive global deal-making” as it tries to compete with Amazon.

While Moody’s Investors Service has been more positive and has applauded Walmart’s “historically flexible” financial policy.

The development was first reported by Bloomberg.

Flipkart

Walmart sells $16bn bonds to finance Flipkart acquisition

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Below is the bank details:

 
Amount: INR 3,19, 000 (After Adding 18% GST and Deducting 2% TDS)
Bank Name: ICICI Bank
Account Type: Current
Account Name: Bareback Media Private Limited
Account Number: 002105023595
IFSC Code: ICIC0000021
 
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