Festive season is coming early for employees at Flipkart who were lucky enough to be holding the company’s shares allotted to them under ESOP. Walmart is going to buy half of their holdings at a price point of $126-$128 per unit.
According to an Economic Times report, filings made by Walmart to authorities in the US, the Securities and Exchange Commission to be precise, show that they are obligated to spend $800 million in buying back shares from employees under the overall deal that it entered into to take over Flipkart in India.
Walmart bought 77% share in Flipkart earlier this year for a whopping $16 billion, becoming the largest shareholder of the e-commerce major.
It is reported that the total shares held by the existing employees at different levels in Flipkart are 11,947,026 (in value terms, this would be around $1.5 billion) and out of this, 6,242,271 shares will now change hands and be bought by Walmart.
The remaining 50% shares are also expected to be sold to Walmart by the employees in two tranches of 25% each with a gap of a year each. That means next year around this time one lot and in 2020, the last lot will be fully acquired by Walmart.
Some employees may get fresh shares allotted by Walmart if they also have similar policies. But this current transaction is limited to the shares that were allocated by the Flipkart management before the Walmart deal took place. While making the payments to the employees against their shares, Walmart will make the due deductions of tax where applicable under the Indian laws.
It may be pertinent to record here that for the employees of the different arms of Flipkart this is not the first occasion they are selling the ESOP shares allotted to them. $100 million changed hands when 3000 employees in Flipkart, Jabong, Myntra and PhonePe liquidated their shares in December 2017.