While the general understanding was that Flipkart is being taken over by Walmart Inc., Amazon seems to have stirred up the pot a bit by dangling a higher price than Walmart will pay. The latest development being reported is that while most other stakeholders are keen on going ahead with the deal already worked out with Walmart, SoftBank, the Japanese investor with a sizeable chunk of shares in Flipkart appears inclined to wait till Amazon makes its proper offer.
The sense is that Amazon has sent out feelers that it is willing to pay 10 to 15% higher than Walmart’s offer and that looks very attractive for SoftBank.
In terms of the holding structure of Flipkart’s stakes, Tiger Global Management has around 20% and almost the same proportion is with SoftBank as well. South African giant has around 13% and the rest with the promoters and minor investors.
Observers feel SoftBank’s hesitation has to do with the higher offer Amazon is promising. At the prices so far discussed with Walmart, SoftBank may not end up gaining much. Flipkart’s Board of Directors have representatives from Tiger Global, Accel Partners and Naspers and it is believed they are all for going ahead with the Walmart deal. They have also expressed their apprehension if the Indian authorities permit one entity to hold close to 80% of the online retail business which will be the scenario if amazon were to acquire Flipkart.
Those giving out these details have indicated that at least one member of the Flipkart Board, Lee Fixel representing Tiger Global is committed to the Walmart deal and he wields considerable clout in the Board to take the decision through.
If SoftBank also falls in line, the Walmart takeover of Flipkart can materialize as early as next month.
If the deal goes through, Walmart is likely to get three or four out of the 10 board seats at Flipkart. The company is expected to be run independently with the cofounders Binny Bansal and Sachin Bansal, along with CEO Kalyan Krishnamurthy retaining their current posts.