With Flipkart founded in 2007 by former Amazon employees Sachin and Binny Bansal and with Walmart becoming its largest stakeholder, more new information about their deal is broadcasted all over the media.
On Saturday, Walmart Inc (WMT.N) said in a filing with a U.S. regulator that it may make India’s online store, Flipkart, public in as early as four years, detailing for the first time a potential listing timeline for Walmart’s largest-ever acquisition.
According to Walmart, in the May 11 filing with the U.S. Securities and Exchange Commission, minority investors holding 60 percent of Flipkart’s shares “acting together, may require Flipkart to effect an initial public offering” (IPO) four years after the close of the Walmart-Flipkart transaction.
Even previously, it was reported that Google-parent Alphabet (GOOGL.O) could invest about $3 billion for a roughly 15 percent stake in Flipkart.
The filing said the IPO must not be done below the value Walmart invested in the Indian e-commerce firm. Walmart announced earlier this week that it would pay $16 billion for a roughly 77 percent stake in Flipkart in what is the U.S. retail giant’s largest-ever deal and to beat the foremost rival Amazon.com Inc (AMZN.O) in a key growth market. The investment implies a valuation of nearly $21 billion for Bengaluru-headquartered Flipkart.
After the deal is made, the minority shareholders in it are Flipkart’s co-founder Binny Bansal, China’s Tencent Holdings (0700. HK), U.S. hedge fund Tiger Global Management and Microsoft Corp (MSFT.O).
Though, with time, Walmart will appoint six directors with the consultation of all the majority Flipkart directors now, it has been made clear in the deal that Walmart will initially appoint five directors to Flipkart’s board, and two directors will be named by minority shareholders while Bansal will take one board seat. It is now only a matter of time before the deal to finishing as it awaits clearance from India’s anti-trust regulator hence expected to close later this year.
Even it would appoint or replace Flipkart’s chief executive and other key executives of group companies after consulting Bansal and the board.
According to the filing, Walmart or its units could ask Flipkart to issue new ordinary shares of up to $3 billion before the close of the “transactions and on or before the first anniversary of the closing.”
Apart from this, Walmart confirmed that no party would be liable to pay a termination fee if a share issuance or purchase agreement with Flipkart were terminated. Such confirmation was needed because it was reported that Japan’s SoftBank Group, which owns a roughly 20 percent stake in Flipkart, was rethinking its exit because of tax liabilities and as it saw further value in Flipkart.
SoftBank Chief Executive Masayoshi Son has said that their investment in Flipkart had grown to almost $4 billion. That growth came just 9 months after SoftBank used its Vision Fund to invest about $2.5 billion in Flipkart.