Flipkart co-founder Sachin Bansal likely to quit after Walmart's deal

Randal Sanchez
May 4, 2018

According to reports that came a few days back, Amazon.com Inc made a formal offer to buy 60 percent of Flipkart, thus complicating Walmart Inc's bid for majority ownership of the Indian online retailer.

Bloomberg also reported that Major shareholder, Softbank will sell it's 20% stack in the company.

The move, which has been termed one of the biggest acquisitions in the world's second-most populous country, and is the biggest ever by Walmart, would see the retail giant spend at least $14.6 billion (up to $16 billion) in a cash-and-stock buyout.

Earlier this week, Inc42 reported that Flipkart has set aside $400 Mn to buyback shares of minority investors.

Finally, after a long discussion over the deal, Flipkart board has approved an agreement to sell 75 per cent equity to Walmart for $15 billion.

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The deal, which will see the USA retail giant buy around 73 per cent of the Indian e-commerce company, was finally sealed on Thursday following months of negotiations. It had invested $2.5 billion in Flipkart in 2017, when the company had a lower valuation. Meanwhile, the e-tailer completed another round of buybacks of its shares valued at $350 million (Rs 2,275 crore) from its investors, according to its regulatory filing on Thursday.

While CEO of Flipkart Kalyan Krishnamurthy will reportedly continue in his position, reports also said that co-founder Sachin Bansal may quit.

Emails sent to Flipkart and Walmart did not elicit any response. However, Amazon was indeed interested in buying Flipkart, said two sources, asking not to be named. It is expected that the offer is a ploy to block Walmart from bringing its expertise in logistics and supply chain management to Flipkart.

Amazon, on its own, has committed investments to the tune of United States dollars 5 billion for its operations in India. Sources said Amazon's deal included a $2-billion breakaway fee in case the deal did not go through because investors and Flipkart cofounders are anxious that the deal will run into regulatory hurdles.

The talks with Walmart for what could be its largest acquisition to date are still ongoing, and a deal is expected to be clinched soon, two people told Reuters on Wednesday. It is quite a smart strategy by Walmart to take on Amazon.

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