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9 May 2018
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Flipkart (The Total Investment & Insurance Solutions)
World's
largest retailer Walmart Inc on Wednesday officially announced that it will buy
a majority stake in Flipkart , making it one of the largest M&A
deals in India.
Walmart will pick up 77 percent stake of
Flipkart for $16 billion, valuing the company at about USD 20 billion. The
remainder of the business will be held by some of Flipkart`s existing
shareholders, including Flipkart co-founder Binny Bansal, China`s Tencent
Holdings Ltd, Tiger Global Management LLC and Microsoft Corp. The Total Investment & Insurance
Solutions
The
deal will help the US retail giant -- which has seen consumers migrate to
online platforms like those run by Amazon -- get a foothold in the world's
fastest growing economy with a market of 1.3 billion people. The Flipkart model
would help the bricks-and-mortar retail giant to take on its global rival
Amazon.
Walmart said it expected the deal to knock
about 25-30 cents off its earnings in fiscal 2019, assuming the deal closes at
the end of the second quarter.
It also said that the deal included $2
billion of funding from new equity in Flipkart, which could be sold to
additional investors in the future, diluting the U.S. company`s overall stake. The Total Investment & Insurance
Solutions
Flipkart was valued at about USD 12 billion
last year, according to researcher CB Insights. For Flipkart, the deal would
give it additional capital and retail muscle to fight Amazon. The Total Investment & Insurance
Solutions
Sachin Bansal, who had co-founded Flipkart
with Binny Bansal 11 years ago, will make his exit from the company by selling
his entire stake (over 5 percent) to Walmart. However, the Binny Bansal and CEO
Kalyan Krishnamurthy will stay in their respective official positions in the
company.
Sachin and Binny, who are not related and
formerly worked for Amazon.Com Inc, like their US rival began by selling books
when they founded Flipkart.The Total
Investment & Insurance Solutions
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