Walmart Inc. has decided to go all in on its deal to acquire Flipkart in a deal sealed on Thursday to buy 73% of the Indian ecommerce company in one of the biggest mergers and acquisitions in the country – spending at least $14.6 billion in the cash-and-stock buyout.
One source said Flipkart was valued at $20 billion while two others – one each at the two merging companies – said Walmart, the world’s largest retailer, had put the target company’s value at as much as $22 billion, a price at which it will spend more than $16 billion.
Alphabet Inc., the parent company of search giant Google, is said to be participating in the deal with a $3 billion investment.
Kalyan Krishnamurthy will stay on as chief executive of Flipkart. And while CEO Krishnamurthy will continue to helm Flipkart, one among its two founders – Sachin Bansal, chairman, or Binny Bansal, group chief executive – may exit. Earlier, FactorDaily had reported that Binny Bansal will quit the company. “But, nothing is final,” one of the sources said.
The sources also confirmed that the deal will be a mix of cash and stock. “Cash component will be close to 55%, which will mark the exit of some of the largest investors in Flipkart,” a second source said.
“Some of the friendly investors like Tencent, Microsoft and Tiger Global will not cash out completely,” said the first source. Softbank, which holds a little over 20% stake in Flipkart will exit the company fully and is expected to make $4 billion – a 60% return on its investment of $2.5
millionbillion merely eight months ago.
SourceThe second source added that Flipkart is not the first Indian ecommerce company Walmart checked out. Others like Snapdeal and ShopClues were also probable targets, but Walmart wanted to go with the largest company, despite the size of the deal.