Flipkart undertakes $350 m buyback ahead of Walmart deal

Flipkart undertakes $350 m buyback ahead of Walmart deal

Walmart proposed to retain Flipkart's current structure, while Amazon has made not such details known. The deal, which will see the U.S. retail giant buy around 73 per cent of the Indian e-commerce company, was finally sealed on Thursday following months of negotiations.

A third source told Reuters that while Flipkart's board has "in-principle" approved engaging with Walmart based on the terms of an offer before them, taxation related concerns and a few other issues need to be resolved. Google's parent company, Alphabet is also said to be participating in the buyout via an investment of $3 billion.

The board of Flipkart Online Services Pvt has approved an agreement to sell about 75 percent of the company to a Walmart Inc. -led group for approximately $15 billion, according to people familiar with the matter, an enormous bet by the American retailer on global expansion. American news sources reported on Wednesday that the online retail giant has made a formal offer to buy 60% of Flipkart, twice the amount of shares that Walmart was hoping to acquire for its 10 to 12 billion dollar (8.4 to 10 billion euros) budget. As per the deal, SoftBank Group Corp, which is one of the biggest investors in Flipkart, through its Vision Fund, would sell its 20-plus per cent stake in the company for around $20 billion valuation.

Walmart would maintain a focus on the grocery market, said the sources, suggesting that nearly 50% of Walmart's initial investment would be funneled into building a food and grocery supply chain. While Kalyan Krishnamurthy is likely to continue as the CEO of the ecommerce giant, co-founder and Chairman Sachin Bansal who was actually looking for a bigger role post deal until last week might exit from the company, says another report.

Walmart would gain a 73% share in the company, and most of its initial investment is expected to go towards a grocery supply chain. Walmart and SoftBank declined to comment. Flipkart had undertaken a similar move earlier this year, following the closing of its Softbank-Microsoft-Ebay deal.

India is a critical market for both Walmart and Amazon, and a deal with Flipkart would help either player in consolidating their position in the booming e-commerce market here.

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