Prior to this, Walmart had entered the Indian retail market with a 50% stake in a joint venture with Bharti Enterprises only to have the partnership ended in 2013 after the alliance turned rocky.
Wal-Mart Inc will offer to buy as much as 86% of India’s largest online retailer Flipkart in a deal that is expected to be signed as early as next week, according to three sources aware of the protracted negotiations.
Flipkart’s early backer, New York-based Tiger Global Management and Japan’s SoftBank Corp, which hold 20% each in Flipkart, are expected to sell a big part of their stake to help give the Bentonville-based giant a large majority stake in the company.
“Wal-Mart’s final shareholding is likely to end up more close to 51% than 86%,” according to one of the sources mentioned above, saying that investors are not likely to sell their entire stakes.
Most other shareholders too are expected to toe the same line, except for the ten-year-old company’s co-founder and current executive chairman Sachin Bansal and the Chinese internet giant Tencent, sources told ET. While Bansal holds 5.5% stake in Singaporeregistered Flipkart, Tencent holds about 7%.
Tencent and Walmart are both shareholders in Chinese online retail company JD.com.
The other significant stakeholders in the Bengaluru-based online retail company include early investor Accel Partners, South African media conglomerate Naspers and US-based online marketplace eBay.
“While Wal-Mart has offered to buy the entire stake held by all these shareholders, it is not final if all of them will agree to sell their entire stakes,” said the second person cited above. “The deal should be signed off next week and will probably take at least another 3 months to close the deal,” the source said referring to clearances like Competition Commission of India (CCI) approval.
Walmart declined to comment on the queries sent by ET while Flipkart and Tencent did not respond as of press time.
The deal, if successful, will value Flipkart at around $18-20 billion and the stake sale by existing shareholders will happen at a discount to this, final negotiations for which are still being worked out. But Wal-Mart will improve the price from the $10-12 billion it was offering for secondary share purchases earlier, said a second source.
Flipkart’s chief executive Kalyan Krishnamurthy will continue for the time being, although it is not clear what role cofounders Sachin Bansal and Binny Bansal will play once the deal fructifies. The two Bansals, who are not related to each other, set up Flipkart in 2007 as an online book retailing venture. The two graduated from IIT-Delhi and put in a stint at the global development centre of Amazon in Bengaluru before turning entrepreneurs.
The current deal is now in the final phase of negotiations with details such as terms of the transaction like liquidation preference of select shareholders, resolving tax issues and structuring being fleshed out, so that there are no regulatory issues to delay the closure.
Liquidation preference is a clause which specifies which investors get paid first and how much they get paid in the event of sale of the company, and is common in private technology investment.
“Some of the late-stage investors in Flipkart have liquidation preference of 1.5-2x,” said a third person familiar with the details. If the deal goes through, it will be one of the biggest foreign direct investments (FDI) in the country over the last several years.
Prior to this, Walmart had entered the Indian retail market with a 50% stake in a joint venture with Bharti Enterprises only to have the partnership ended in 2013 after the alliance turned rocky. The retailer steered clear of any Indian partnerships until September 2016, when it began investment discussions with Flipkart, which was first reported by ET.
The paper was also the first to report on Walmart being in advanced talks to pick up a stake in the ecommerce company in its January 31 edition. Walmart CEO Doug McMillon led a delegation that visited Flipkart’s Bengaluru office which included Marc Lore, CEO of Walmart e-commerce and Judith McKenna, CEO of Walmart International in January
Reliance Jio is set to hive off its fibre and tower business units HIGHLIGHTS Reliance Jio acquired towers from RCom last year TRAI reported the operator has a monthly growth rate of 5.44 percent The new move will widen its market presence Reliance Jio Infocomm on Tuesday announced that its board has cleared spinning off its fibre and tower assets into two separate units. With the new move, the telco will be able to widen its market presence and start monetising its new businesses. The decision is subject to all requisite statutory and regulatory approvals. In December last year, Reliance Jio announced the acquisition of mobile towers, spectrum, and other wireless infrastructure assets from Reliance Communications (RCom). The operator is presently the fastest-growing telco in the country with a monthly growth rate of 5.44 percent, with a total of 13.02 million customers, as per a recent report by Telecom Regulatory Authority of India (TRAI). "The Board of ...
Truth about A320neo engines: You have been flying dangerously & probably had no idea about it IndiGo's instances of single-engine failure in 18 months averaged one a week. Experts say these failures were a sort of world record. For many months, before DGCA ordered IndiGo and GoAir to ground faulty A320neo jets with faulty Pratt and Whitney (PW) 1100 engines, thousands of domestic passengers would have flown totally unaware of the danger. On Monday, 11 such planes were grounded by IndiGo and GoAir, hours after the third mid-air aircraft engine failure in two weeks. How could the airlines keep flying unsafe until the DGCA ordered them not to? Read below to know how safe — or dangerous — the situation was. The issue A320neos, manufactured by European aircraft manufacturer Airbus and powered by American aerospace manufacturer Pratt and Whitney's (PW) turbofan engines, have faced engine problems leading to frequent failures in recent mont...
Jio Prime Renewal Option Not Visible In MyJio App? Try This Gadgets 360 Staff , 01 April 2018 The Jio Prime renewal option can be seen in a banner when you open the MyJio app HIGHLIGHTS Jio Prime subscription renewal will be free for all existing users Customers will get the free service extension via MyJio app New users must pay Rs. 99 for the service Jio Prime subscription for all users has already expired, but as the operator has announced , it will remain free for one more year for all customers who have paid for the service once. Of course, you need to apply for the Jio Prime free renewal as it is not automatically credited to the users. With 175 million users across the country on the network, it is likely some Jio subscribers will face some glitches while trying to renew Prime for free. Well, if that's the case with you as well, then there's a simple solution you can try out. You are probably not seeing the message to ex...
Comments
Post a Comment