RETAIL GIANT GIVES DETAILS OF LARGEST-EVER DEAL
WALMART Inc said last Saturday (12) in a filing with a US regulator that it may take India’s Flipkart public in as early as four years, detailing for the first time a potential listing timeline for Walmart’s largest-ever acquisition.
Minority investors holding 60 per cent of Flipkart’s shares “acting together, may require Flipkart to effect an initial public offering” (IPO) four years after the close of the Walmart-Flipkart transaction, the Arkansas-based retailer said in a filing last Friday (11) with the US Securities and Exchange Commission.
The IPO should be done at no less a valuation than that at which Walmart invested in the Indian e-commerce firm, the filing added.
Walmart announced earlier last week that it will pay $16 billion (£11.8bn) for a roughly 77 per cent stake in Flipkart. It is the US retail giant’s largest-ever deal and a move to take on rival Amazon.com Inc in a key growth market.
The investment implies a valuation of nearly $21bn (£15.5bn) for Bangalore-headquartered Flipkart.
Minority shareholders after the deal include co-founder Binny Bansal, China’s Tencent Holdings, US hedge fund Tiger Global Management and Microsoft Corp.
The deal now awaits clearance from India’s anti-trust regulator and is expected to close later this year.
As part of the deal, Walmart will initially appoint five directors to Flipkart’s board. Two directors will be named by minority shareholders while Bansal will take one board seat, according to the filing.
Walmart said it may, in future, appoint a sixth board member with the approval of the majority of the Flipkart directors.
It also revealed that it could appoint or replace Flipkart’s chief executive and other key executives of group companies in consultation with Bansal and the board.
Walmart or its units could ask Flipkart to issue new ordinary shares of up to $3bn (£2.2bn) before the close of the “transactions and on or before the first anniversary of the closing”, it said.
The Economic Times newspaper reported last Friday (11), citing unnamed sources, that Japan’s SoftBank Group, which owns a roughly 20 per cent stake in Flipkart, was rethinking its exit due to tax liabilities and because it saw further value in Flipkart.
SoftBank chief executive Masayoshi Son has said that its investment in Flipkart had grown to almost $4bn (£3bn). That growth came just nine months after SoftBank used its Vision Fund to invest about $2.5bn (£1.8bn) in Flipkart. A spokeswoman for SoftBank in India declined comment.
Former Amazon employees and brothers Sachin and Binny Bansal founded Flipkart in 2007 and, just like Amazon, began by selling books. (Reuters)
Scott Bessent