Walmart To Acquire 75 Percent Stake In Flipkart
American retail giant, Walmart, is expected to make an official announcement on Wednesday regarding its acquisition of FlipKart. The company is expected to acquire 75 percent of FlipKart. FlipKart is the leading E-Commerce player in India. Walmart’s stake in FlipKart is valued at roughly $15 billion. Walmart is looking to increase its business share in India by acquiring FlipKart. The company now plans to take rival Amazon.com in India and recover its lost market share. As a result of this deal, FlipKart will now be worth $20 billion.
Flipkart, which was founded in 2007 by the Bansal brothers, is currently the number 1 ecommerce company in India. Walmart will also invest nearly $ 2 billion directly in FlipKart. Also, once the deal is confirmed, Sachin Bansal will leave the company and sell his stake of 5.2 percent. China Tencent Holdings and Tiger Global Management, the existing shareholders of Flipkart will also give up their stakes in FlipKart. Microsoft Corp and Naspers Ltd will be keeping small holdings in the newly formed company.
Moreover, Japanese company SoftBank will sell all its stake. It currently owns 20 percent stake in FlipKart. Analysts predict that SoftBank will make a decent profit by selling its stake. Tiger Global Management and Tencent Holdings will continue to be on the board of FlipKart. Binny Bansal the CEO of FlipKart currently owns 5.1 percent of the company. It is still unclear whether he will remain in the company or not. After the deal is concluded, FlipKart and Walmart India will remain distinct brands. Walmart will likely use cash and debt to fund this deal. Also, once the deal is concluded, FlipKart’s financials will be reported by Walmart International as part of the Walmart group. FlipKart has millions of customers. In the fiscal year completed on 31st March, the Indian E-commerce giant reported GMV of $7.5 billion. The company reported net sales of $4.6 billion.
The Bansal’s will become super rich as a result of this transaction. Walmart is also expected to add new products on FlipKart after the deal is concluded.