The wait for Walmart–Flipkart deal would end today. The Walmart-Flipkart deal would be one of the largest M&A deals in India, US-based world's largest retailer Walmart Inc is likely to announce its deal to buy a majority stake in Flipkart on Wednesday. According to various media report, India Walmart chief executive Doug McMillon have arrived in Bengaluru and announced the deal officially at a town hall meeting.
The said deal with Flipkart would make Walmart directly take on Amazon in Indian e-retail space.
Below we have listed 10 major developments related to the deal which you should know about:
1. US retail giant Walmart in a $12 billion acquisition of India's biggest e-commerce firm Flipkart is expected to see buy 72-73 per cent stake. Bloomberg reported that board of Flipkart Online Services has approved an agreement to sell about 75 per cent of the company to a Walmart-led group for about$ 15 billion.
2. Walmart is likely to buy stakes of multiple Flipkart investors, including that of Tiger Global Management and Softbank to end up with a significant majority holding, sources said. Tiger Global and Masayoshi Son-led Softbank hold about 20 per cent stake each in the Singapore holding company of Flipkart. Walmart will buy the stake in the Singapore holding company, Flipkart Pvt Ltd, that, in turn, holds majority shares in the multiple companies that run various businesses of the e-commerce company Flipkart.com in India.
3. As a precursor to the deal, Flipkart's holding company in Singapore has just turned private by buying back over 1.8 million shares worth more than $350 million from its minority investors. According to the information filed by Flipkart with Singapore's Accounting and Corporate Regulatory Authority, that was sourced by data platform Paper.vc, the move values the Bengaluru-based firm at a whopping $17.69 billion.
4. According to market watchers, the decision is aimed at helping Walmart buy stake from a single entity rather than multiple parties. Flipkart had undertaken a similar move earlier this year, following the closing of its Softbank-Microsoft-Ebay deal.
5. There is buzz also that Sachin Bansal, who founded Flipkart along with Binny Bansal in 2007, may quit after the majority stake acquisition by Walmart. Bansals, who are not related to each other, hold about 5 per cent stake each in Flipkart.
6. Sources indicated that the deal with Walmart, which may see participation from Google's parent Alphabet, would value Flipkart at about$ 20 billion.
7. Flipkart founders Sachin and Binny Bansal may have to pay 20 per cent capital gains tax if they sell their shares in the company as part of the proposed deal with US retail giant Walmart, say tax experts.
8. According to experts, there would be two taxation angles to the deal once it goes through. The first will be taxation of capital gains earned by the sellers (Flipkart investors).
Secondly, whether Flipkart India is allowed to carry forward the losses for the adjustment against income tax payable by the company. Nangia & Co Director Chirag Nangia said the taxability of the foreign investors in Flipkart will depend on the country through which the money is routed and whether India has a tax treaty with those nations.
9. Earlier, moving closer to its deal with Walmart, e-commerce major Flipkart has bought back over 1.8 million shares worth more than USD 350 million from minority investors, as per information filed by Flipkart with Singapore's Accounting and Corporate Regulatory Authority.
10. 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.
(With inputs from agencies)
