Walmart to take over 85% in Flipkart? | Fusion - WeRIndia

Walmart, the giant American retail company, bought a huge stake of 77% in Flipkart, the largest online retail company in India.

Within a year of completing this purchase, Walmart may invest an even bigger stake in Flipkart.

According to Walmart’s filing to the US Securities and Exchange Commission, they could invest $3 billion more in Flipkart.

This would take Walmart’s stake in Flipkart to over 85%. The price at which Walmart bought the initial stake of 77% has not been disclosed.

It is possible that different tranches were purchased at different prices.

The filing said that Walmart’s additional share purchase would be at the same price at which it made its initial investment.

Currently, SoftBank, the giant Japanese telecoms and internet company, is undecided about the sale of its shares.

SoftBank is Flipkart’s key shareholder. The company holds about 22% in Flipkart. In August of 2017, SoftBank invested $2.5 billion in Flipkart through its $100 billion Vision Fund.

Walmart and SoftBank are currently in discussions to decide on a time to execute the share transaction. The share transaction would be executed at a predetermined price.

The filing said that Walmart is investing $2 billion in cash (about ₹134.78 crore) and purchasing shares worth $14 billion (about ₹944 core) from Flipkart’s existing shareholders. Walmart has said that it may either appoint or replace the chief executive officer and other principal executives of the Flipkart group of companies.

This would be subject to certain consultation rights of the board and founder. After four years of closing the Walmart deal, Flipkart may opt for an initial public offering.

The Flipkart board will have eight directors instead of ten directors. However, the number of directors may increase to nine directors any time.

According to Walmart, the transaction to buy shares in Flipkart should close by March 9th, 2019.

Image credit: Up Close to Walmart image by Random Retail is licensed under CC BY 2.0

Image Reference: https://www.flickr.com/photos/walmart3/12331640945