Walmart close to buying majority stake in Flipkart for at least $12 bn: report

The Arkansas-based company, the world’s largest retailer, has been in talks with all the major investors in Flipkart, which includes JSE-listed Naspers, which holds 13 per cent, Tiger Global Management and SoftBank Group hold around 20 per cent each, venture capital firm Accel Partners 6.4 per cent, while Flipkart founders Sachin and Binny Bansal hold 5 per cent.

Walmart is likely to buy between 60 per cent to 80 per cent of Flipkart at a total valuation of around $20 billion, the report added.

One of the major issues still to be resolved is whether Flipkart’s founders will lead the business after the deal and how much each existing investor sells and what Walmart’s final stake will be.

SoftBank, which hold the stake through its Vision Fund, was unwilling to sell a part of its stake since Walmart was offering to buy at a valuation of $12 billion, which it considered low, but is now willing to sell some of its stake, Reuters had earlier reported.

Flipkart’s board had considered taking on Walmart and Amazon as potential partners, but decided that Walmart could close a deal more easily, since it would face fewer regulatory since it has no online retail presence in the country, while Amazon is Flipkart’s main rival in India.

The US, China and India are the world’s biggest market place for online commerce and Amazon has found it very difficult to compete with Alibaba Group in China.  

Amazon founder Jeff Bezos has already committed $5.5 billion to its Indian division and the company’s local CEO Amit Agarwal, has adapting the site to local conditions.

A successful deal for Walmart would give it access to an emerging market of 1.3 billion people where e-commerce is expected to grow to $200 billion in the next 10 years.

Bengaluru-based Flipkart was founded in 2007 by former Amazon employees Sachin Bansal and Binny Bansal.