Walmart completes due diligence for buying into India's Flipkart -sources
By Sankalp Phartiyal
NEW DELHI, April 6 (Reuters) - Walmart completed a
thorough due diligence process on e-commerce firm Flipkart this
week, two sources said, as the U.S. retail giant looks to take a
controlling stake of 51 percent or more in the Indian company.
Walmart has already floated a shareholder agreement, or
offer proposal, and is looking to shell out about $10 billion to
$12 billion for the stake that would value Flipkart at roughly
$20 billion, one of the sources familiar with the matter said.
A deal is far from finalised, however, and talks between the
two parties and investors in Flipkart are ongoing, said a third
source.
The sources asked not to be named because the talks are
private.
A stake in Flipkart would pit Walmart against Amazon.com
in India and local media have reported https://www.reuters.com/article/us-flipkart-online-amazon-com/amazon-may-offer-to-buy-indias-flipkart-report-idUSKCN1HB08Z
that Amazon is exploring a rival offer for India's largest
home-grown e-commerce player.
Walmart is now seeking a bigger stake than previously
expected. Reuters reported in February https://in.reuters.com/article/us-flipkart-walmart-exclusive/exclusive-walmart-in-talks-to-buy-more-than-40-percent-of-indias-flipkart-sources-idINKCN1G00MU
that it was in talks to purchase a stake of over 40 percent in
Flipkart, which is backed by the likes of SoftBank Group
, Tiger Global, eBay, Accel Partners, Naspers,
Tencent Holdings and Microsoft Corp.
Walmart and Flipkart declined to comment. SoftBank also
declined to comment, while Tiger, its other lead investor, was
not immediately reachable for comment.
Bengaluru-based Flipkart, started by two former Amazon
employees, is fighting Amazon to grab a bigger piece of India's
massive online retail market which, according to Morgan Stanley,
could be worth $200 billion in a decade.
Walmart's investment would give Flipkart not just additional
funds to fight Amazon, but also arm it with a formidable ally
with extensive experience in retailing, logistics and supply
chain management.
It is seen as a more likely investor than Amazon. A person
familiar with the matter told Reuters that the probability of a
Flipkart-Amazon deal was low, and that such a deal may spark
competition fears as Flipkart and Amazon dominate India's
e-commerce market.
GREATER HEFT
Bentonville, Arkansas-based Walmart could also aid Flipkart
in developing its private label business, one of the sources
said.
For Walmart a deal would open up a vast market and another
front to take on its biggest rival.
Walmart is initially not expected to rock the boat and is
likely to retain top management. It may, however, look to bring
in some of its own people on the legal and finance teams at
Flipkart, one of the sources said.
Walmart would also likely have a say in the appointment of a
chief financial officer at Flipkart, if the deal is concluded,
said another of the three sources.
Two of the three sources said Tiger Global Management, Accel
Partners and Naspers, would likely sell their entire stakes in
Flipkart to Walmart if a deal is reached.
Accel and Naspers declined to comment.
Japan's SoftBank, which has invested in Flipkart through its
Vision Fund, may also consider selling a part of its roughly 20
percent stake if Walmart offers a good price, two sources said.
SoftBank last year invested $2.5 billion in Flipkart through
prime and secondary share purchases.
(Reporting by Sankalp Phartiyal
Editing by Euan Rocha and Susan Fenton)
2018-04-06 14:01:29
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