Walmart said to be close to $12bn deal with Naspers-backed Flipkart

  • Walmart said to be close to $12bn deal with Naspers-backed Flipkart

Walmart said to be close to $12bn deal with Naspers-backed Flipkart

Tiger Global Management will sell almost all its 20% stake in Flipkart, while Japan's Softbank Group, will offload a substantial part of its 20%-plus holding, reported Bloomberg.

"All the major investors in Flipkart are now on board with the Walmart purchase, after an earlier debate over an Inc".

Walmart likely faces fewer regulatory hurdles because it now has no online retail presence in India, while Amazon is already the second-largest e-commerce player and Flipkart's primary rival, the report added.

Flipkart founders Sachin and Binny Bansal are also said to have favoured Walmart.

And the key issue post the stake sale will be 'what happens to Flipkart's founders.' "The amount each existing investor sells and the size of Walmart's final stake still need to be finalised. Walmart will likely end up with 60% to 80% of Flipkart, which will be valued at about $20 billion", reported Bloomberg.

Analysts told Proactive Investors on April 5 that a Flipkart deal with Amazon was "highly unlikely" as it could spark "monopoly concerns" as both these companies dominate India's e-commerce market.

World's largest retailer Walmart is ramping up its online strategy at home and overseas as consumers migrate to online commerce, driven by Amazon.

Furthermore, it's also reported that Flipkart's board met very recently to discuss the proposals made by Amazon and Walmart and they're now in a mindset that the Walmart deal could be closed more easily. As of now, it seems that the Flipkart-Walmart is a done deal. Flipkart now controls almost 40% of India's online retail market, ahead of Amazon, showed estimates by researcher Forrester. Walmart can aid Flipkart with deep pockets and decades of retailing expertise in skills from logistics to marketing. "Now Amazon will get ready for the battle ahead, and pump more into investments, particularly in food retailing and fashion".

Last August, Japan's SoftBank bought a 20 per cent stake in the country's leading etailer for $2.5 billion through its $100 billion technology-focused Vision Fund.

At stake is a growing online sales market as more of India's 1.4 billion population comes online for the first time. That stake could be worth more than $4 billion at the Walmart deal's valuation.

Tiger and SoftBank are now the startup's largest shareholders, followed by South Africa's Naspers. Adding a new dimension to the proposed deal, Amazon India head Amit Agarwal in an interview to the Mint said, "the deal will be good for the e-commerce in as long as there are investments, it's good for everyone".