Markets

Flipkart approves $15 billion stake sale to Walmart-led group

Flipkart approves $15 billion stake sale to Walmart-led group

With Walmart buying Flipkart, Amazon will be in competition now with Walmart in India.

"Flipkart is key to a global e-commerce strategy", said Arvind Singhal, chairman of the New Delhi-based retail consultancy Technopak Advisors.

With this deal, Flipkart will be valued at $20 billion, which is quite higher than the company valuation at $12 year.

Last year, SoftBank Vision Fund had pumped in an estimated United States dollars 2.5 billion in Flipkart for about 20 per cent stake in the company.

The move is said to be in line with Flipkart's efforts to ease of the acquisition deal with Walmart.

Amidst this, according to a report by Factordaily, Walmart has chose to pay a whopping $14.6 billion in cash and stock to acquire 73 per cent stake in the biggest e-commerce company in India. "Binny and Krishnamurthy have backed the deal with Walmart and the two are seen leading the final negotiations, which will likely result in a share purchase agreement by Walmart by early next week, ' another person close to the deal said". His co-founder, Binny Bansal (no relation) would stay on-according to this report, Walmart only wants one of the co-founders to hang around.

After failing to build an online retail venture, this deal will give Walmart another chance at India's growing ecommerce market and take on Amazon, which it has been struggling to compete with in the rest of the globe.

Earlier this year it was reported that Amazon may submit a rival offer to buy the company, which now seems dead. Amazon is out of the running unless Walmart hits unforeseen trouble. The U.S. retailer has been working to win over the Indian company since at least previous year.

Much is left to speculation, however: Amazon, Walmart and Flipkart all refuse to comment in any official capacity on what could well become one of the most important e-commerce deals of the year.

Tiger Global Management and Softbank could sell their stake to Walmart which is looking for 60 percent stake in the company.

Next comes the Accel Partners, which has already clocked $113.5 Mn through partial exits from Flipkart.

Walmart is now seeking a bigger stake than previously expected.

As part of the Walmart deal, Flipkart's existing shareholders Tencent Holdings Ltd., South Africa's Naspers Ltd. and Microsoft Corp. are expected to retain small stakes, the people said.