Putting an end to the apprehension and deliberations of the startup ecosystem of not just the country but also the world, the Flipkart-Walmart deal might get finalised as early as next week, media reports claim.
What would the deal involve?
Sources close to the development have said that SoftBank, the biggest stakeholder in Flipkart, was reluctant to part with its 23.6% stake for $12 Bn. It had estimated a better price that amounted to $15-17 billion, through a secondary sale of shares.
However, the Japanese conglomerate seems to have come around and has solved the deal with Walmart.
Reuters had reported last week that Bentonville, Arkansas-based retail giant, Walmart has completed its due diligence on Flipkart and had made a proposal to buy 51 percent or more of the Indian company for between $10 billion to $12 billion.
Walmart has also reached an agreement on buying stakes of New York-based investment firm Tiger Global Management, South African media conglomerate Naspers, venture capital firm Accel and China’s Tencent Holdings.
Clearly, Amazon is not getting any share in the Indian e-commerce unicorn, which is now speculated to be worth $18-20 Bn if the Walmart deal goes through.
Sachin Bansal and Binny Bansal the founders of Flipkart founders, may sell a part of their stake in the company.
Walmart is planning to retain the senior leaders, with Myntra CEO Ananth Narayanan and PhonePe co-founders Sameer Nigam and Rahul Chari continuing in their roles. Also, at the same time, Walmart has plans to give a bigger role to Flipkart executive chairman Sachin Bansal and wants him to be more involved in the running of the company. It also wants Flipkart CEO Kalyan Krishnamurthy to continue in his role in the company.
Another major point in the deal is the agreement between eBay and Flipkart. eBay had invested $500 Mn in Flipkart in October 2017. At the time,eBay had taken over 5.44% stake in the business and handed over eBay India operations to Flipkart.
Adding to the trouble is the point that “eBay also has the right to take back control of the eBay India brand name should Flipkart get acquired”.
This means that Walmart has to strike a deal with eBay so that it does not hinder the culmination of the deal.
As the Indian e-commerce market is expected to reach $200 Bn by 2026, it has been attracting major investments in the segment. Amazon has been intending to do major investments in India and even Facebook has brought its marketplace. As Walmart nearly completes the deal, the entry of global retailer is bound to cause ripples in the market with online-to-offline models picking up the pace in the industry.
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