Walmart, which is in the final stages of talks to buy a majority stake in e-commerce firm Flipkart, is likely to bring along search giant Google as a strategic partner and investor after the deal, according to two people familiar with the latest discussions.
Flipkart’s board has virtually given the green light to the sale to Walmart and the deal is expected to close over the coming weeks, the people mentioned above said, requesting anonymity.
Walmart will buy at least 55% of Flipkart at a valuation of $20-21 billion, but the stake could end up being higher by the time the deal closes, they said.
Most of Flipkart’s existing investors are expected to sell off their entire stakes, though a few prominent investors, such as Flipkart’s earliest backer Tiger Global Management, are expected to retain a small stake. Other investors who will retain small stakes include Tencent and Naspers. SoftBank is also expected to sell off part of its current stake, the two people said.
Walmart also wants Flipkart co-founder Binny Bansal (group chief executive officer) and CEO Kalyan Krishnamurthy to continue in their roles after the acquisition, the people said.
Mint reported on May 2 that Flipkart’s executive chairman and co-founder Sachin Bansal had not yet taken a decision on his future or how much stock he will sell in the proposed deal.
The Economic Times reported on Friday that Sachin Bansal may leave Flipkart after the conclusion of his company’s sale to Walmart.
Binny Bansal and Krishnamurthy, a former executive at Flipkart’s most influential shareholder Tiger Global, are likely to continue in their current roles after the deal, Mint reported then.
For Walmart, the acquisition of Flipkart will easily be its largest outside the US.
The deal is also significant for the broader Indian e-commerce industry, as it effectively pits Walmart-Flipkart in a market share battle against Amazon in one of the world’s major consumer internet economies and mirrors their battle in the US, their home market.
Mint had first reported on May 2 that Walmart was in final negotiations to buy a majority stake in Flipkart Ltd even as a rival combination of Flipkart and Amazon looked increasingly unlikely.
SoftBank, Flipkart’s largest shareholder, was pushing other investors to wait for a rival offer from Amazon. However, the Japanese company has now agreed to sell the online retailer to Walmart as all the other key shareholders, including Tiger Global Management, Naspers and Accel Partners, were firm in their preference for Walmart.