Walmart reaches final agreement with Flipkart, official announcement expected soon

New Delhi/Tokyo: US retail giant Walmart will buy a majority stake in India's largest e-commerce company Flipkart, according to the head of SoftBank, a major stakeholder in the Indian firm.

"Last night, (they) reached a final agreement and it was decided that Flipkart will be sold to America's Walmart," said SoftBank CEO Masayoshi Son, whose firm owns a 20 percent stake in Flipkart.

In what could be touted as one of the largest M&A deals in India, world's largest retailer Walmart Inc is yet to announce its deal to buy a majority stake in Flipkart officially.

A Times of India report had earlier said that Walmart chief executive Doug McMillon will arrive in Bengaluru and announced the deal officially at a town hall meeting.

Japan's SoftBank Group Corp and Tiger Global Management are said to be selling almost all of their about 20 percent stake each in Flipkart.

Walmart will likely end up with upto 80 percent of Flipkart, valuing the company at about USD 20 billion.

The deal, will see some of the biggest investors in Flipkart offloading their stake in the country's largest e-commerce company.

Bentonville, Arkansas-based Walmart will acquire about a 60 percent stake in Flipkart, while Alphabet will get a roughly 15 percent stake in the online marketplace for about USD 3 billion, a Reuters report said.

Walmart is expected to get three board seats at Flipkart and will also have a say in the appointments of the group`s finance, legal and compliance heads, the news agency said.

Flipkart was valued at about USD 12 billion last year, according to researcher CB Insights.
The deal will help the US retail giant -- which has seen consumers migrate to online platforms like those run by Amazon -- get a foothold in the world's fastest growing economy with a market of 1.3 billion people. The Flipkart model would help the bricks-and-mortar retail giant to take on its global rival Amazon.

For Flipkart, the deal would give it additional capital and retail muscle to fight Amazon.

Together, Flipkart and Amazon control majority of India's USD 30 billion e-commerce market that is forecast to grow to USD 200 billion by 2026 (Morgan Stanley estimate).

There are also reports that Sachin Bansal, who had co-founded Flipkart with Binny Bansal 11 years ago, could be exiting the company by selling his over 5 percent stake.

Amazon is believed to have offered Flipkart a higher valuation of about USD 22 billion, along with a break up fee of USD 2 billion, compared to Walmart's USD 18-20 billion valuation of the Bengaluru-based company.

With Agency Inputs