Walmart, which is trying to acquire a big stake in India’s leading eCommerce player Flipkart, has reportedly convinced some of its key shareholders to sell their stakes to the retailer.
The Economic Times reported that Walmart has reached agreements with Tiger Global Management, the New York investment firm; Naspers, the South African media conglomerate; Accel, the venture capital firm and Tencent Holdings, the Chinese company, to purchase their stakes in Flipkart.
SoftBank, which is Flipkart’s largest shareholder, is still holding out for a better offer price. The Economic Times reported that Flipkart Founders Sachin Bansal and Binny Bansal could sell some of their stake as well. The shareholders combined own more than 55 percent of Flipkart. SoftBank has a 20 percent stake in Flipkart and is hoping to get $15 billion to $17 billion via a secondary share offering.
“Discussions with SoftBank are still ongoing … Most of the others have come aboard. In a deal like this, there are always ebbs and flows, but there is a time factor to consider as well,” said an unnamed source in the report. In addition to purchasing the shares, Walmart is expected to invest new capital in Flipkart, which could result in a deal that is worth $10 billion to $12 billion.
For Walmart, acquiring a stake in Flipkart would enable it to access a market of more than 1 billion people. Unlike rival Amazon, which has invested in India and now trails Flipkart closely, it has had a tough time cracking the Indian market. While Amazon is reportedly going after Flipkart as well, investors in the Indian company are concerned that such a deal would face regulatory issues since it would combine two of the leading players. As a result, the Walmart offer is favored. For Flipkart, the stake sale to Walmart would give it more power to take on Amazon and provide access to a partner that has experience in retail, logistics and supply chain management.
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