As the Flipkart-Walmart deal nears a close, several key shareholders in Flipkart have reportedly agreed to sell their stakes in the ecommerce major to Walmart. However, Flipkart’s largest shareholder SoftBank wants a better price, reports Economic Times.
SoftBank, which holds 20% stake in Flipkart wants a price of around $15 billion-$17 billion through a secondary sale of shares. Walmart has reportedly offered a $10 billion-$12 billion valuation for its shares.
Co-founders Sachin Bansal and Binny Bansal are expected to sell a part of their stake. Apart from that, Tiger Global, Naspers, Accel and Tencent have agreed to sell their stakes to Walmart. Currently, all the above shareholders together hold over 55% stake in Flipkart. So, if Walmart acquires the stakes as per the agreement it reached on, it could hold nearly 50% stake in Flipkart.
Walmart is also expected to pump in capital into Flipkart once the deal goes through and this is expected to push the deal size to $10 billion-$12 billion, reports ET.
Additionally, a Recode report states that Walmart will also have to first work out a deal with eBay, which invested around $500 million in Flipkart for 5% stake last year. Flipkart acquired eBay’s India operations as part of this deal.
eBay signed a four-year exclusive commercial arrangement to partner with Flipkart at the time. There are still three years remaining. Recode reports that even if Walmart takes a controlling stake in Flipkart, it may not be able to take over the actual merchandise deals with Flipkart. Moreover, eBay reportedly also has the right to take back control of the eBay India brand name if Flipkart gets acquired. Therefore, Walmart will first have to settle this agreement with eBay.
The final contours of the deal are still in the works and what the final shareholding pattern will look like will only be known once its closed. SoftBank may even back out of the deal if it doesn’t get the desired price and if Walmart clinches a deal with the rest of the shareholders.
Interestingly, Amazon is also eyeing Flipkart and is considering buying a majority stake in its biggest rival in India. FactorDaily reported last week that Amazon offered a ‘breakup fee’ of $1 billion-$2 billion, which shows its seriousness to buy the ecommerce major.