American brick-and-mortar retail firm Walmart Inc will pay approximately $16 billion for an initial stake of approximately 77 per cent in Flipkart Private Limited, which includes Myntra, Jabong and PhonePe, the United States-based company announced on May 9. The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC and Microsoft Corp.
Flipkart intends to transition into a publicly-listed, majority-owned subsidiary in the future, Walmart said in a statement, confirming the exit of Sachin Bansal, the co-founder of Flipkart, and SoftBank Group. The deal is subject to regulatory approval in India.
“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” Doug McMillon, Walmart’s president and chief executive officer, said in a statement.
“This investment is of immense importance for India and will help fuel our ambition to deepen our connection with buyers and sellers and to create the next wave of retail in India,” Binny Bansal, Flipkart’s co-founder and group chief executive officer, said. Sachin and Binny Bansal owned a little more than 5 per cent each in Flipkart, which was founded in 2007, according to business intelligence platform Paper.vc.
The deal between Walmart Inc and Flipkart was earlier confirmed by SoftBank Group chief executive Masayoshi Son on May 9. Son announced the deal hours before Walmart could make the announcement about their biggest acquisition so far.
“I think we announced it last night,” Son said, during an investor call, Bloomberg had reported earlier. “If not, well then that means I’m just spouting this out. In any case, it’s been decided.”
Later during the announcement, Son said, “Oh, I see here that the Flipkart-Walmart deal isn’t fully confirmed at this point in time.” He then added, “Yabai desune,” which roughly translates from Japanese to “Oops” or “That’s not good,” the report added.
“What should I do?” he said. “Well, I said it. I can’t take it back. So that’s it.”
Son told investors that SoftBank, through its Vision Fund, had invested $2.5 billion in Flipkart and that the stake will be worth $4 billion in the deal, according to the report.
Earlier reports had said that SoftBank would completely sell its 20 per cent stake in Flipkart to Walmart.
Google parent Alphabet Inc, which was also expected to be a partner in the deal after acquiring 15 per cent stake for about $3 billion, was not mentioned by Walmart in its statement.
Flipkart chief operating officer Binny Bansal had conducted a meeting with the firm’s top leadership at its Bengaluru headquarters on May 7, according to Reuters. The report also said that while Sachin Bansal would exit after the Walmart deal is sealed, chief executive officer Kalyan Krishnamurthy will remain with the firm.
American e-commerce firm Amazon was also reported to made an offer to buy 60 per cent of Flipkart earlier this month.