In a huge merger on Thursday, reports suggest that U.S. retail giant Walmart Inc has signed a deal to acquire 73% of controlling stakes of Indian e-retail company Flipkart - a deal that will likely prompt the exit of Flipkart's co-founder Sachin Bansal. The US retail giant is said to be investing around $12 billion to pick up 60-80 per cent in Flipkart at a primary valuation of $20 billion. These investors, are reportedly expected to fully or partially sell their shares in Flipkart as Walmart makes its acquisition bid for the company. And as per earlier reports, the Japanese internet and investment conglomerate will get an exit of $4 billion for its $2.5 billion investment in Flipkart eight months ago. Sources close to the newspaper said Walmart was supposed to sign the term sheet for the deal nearly three weeks ago, but did not because SoftBank wanted Flipkart to wait until Amazon had put in its bid.
There has been speculation going on for quite some time that Flipkart and Walmart are in the final stages of their deal.
Once the acquisition process is complete, Flipkart's Executive Chairman Sachin Bansal may hang up his boots after taking company to new heights in the past 10 years, reports suggest.
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Flipkart and Alphabet did not immediately respond to requests for comment.
In a Flipkart-hosted press conference today, the CEOs of Flipkart and ASUS - Kalyan Krishnamurthy and Jerry Shen - came together to announce a long-term strategic partnership to launch products in India.
Flipkart's other investors, like Tencent, Microsoft and Tiger Global aren't looking to cash out just yet.
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Apart from a 60 percent stake, Amazon also offered Flipkart a breakup fee of United States $2 billion, the channel further said in its report. "It is important for food safety", the source said.
Flipkart is reported to have bought back shares worth $350 million from investors in its Singapore-based parent to regain its private company status ahead of its sale to USA retail giant Walmart Inc.
"The stakes are really high for Walmart", said Brian Yarbrough, senior research analyst with Edward Jones.
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Walmart and Amazon's interest in gaining share in India comes after both retailers have struggled to grow in China, ultimately losing ground to Chinese e-commerce firm Alibaba Group Holding Ltd.