Flipkart buys back shares worth $350, step closer to Walmart deal

Flipkart buys back shares worth $350, step closer to Walmart deal

With this deal, Flipkart will be valued at $20 billion, which is quite higher than the company valuation at $12 year.

The development assumes significance as USA retail giant Walmart is close to sealing its deal to acquire majority stake in Flipkart. They weren't particularly amped about the deal when it was being initiated and now that it seems to be final, SoftBank plans on selling off its 25% stake in the company to earn almost $5 billion.

Most of Flipkart's large investors, including Tiger Global, Accel, Microsoft, Naspers and eBay, remain on Flipkart's capitalization table, although Tiger Global and Accel-Flipkart's two earliest investors-have sold a small portion of their holdings from their earlier funds as part of this deal.

After months of negotiation, the board of Indian ecommerce major Flipkart has approved to sell around 75% to Walmart for an amount of $15 billion, reports Bloomberg.

The world´s largest online retailer has been pouring billions of dollars into India to ship goods to shoppers faster, contributing to growing losses internationally.

According to Factor Daily, both Flipkart and Walmart have signed tentative agreements and the deal will be a mix of cash and stock as we have mentioned before.

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However, Amazon was indeed interested in buying Flipkart, said two sources, asking not to be named.

"We all knew that Amazon had been in the fray", reported Kritika Saxena, for CNBC-TV18, "but what we are looking at now is that a formal offer has finally been made".

Earlier in April 2017, when Flipkart gained $2.5 Bn funding from SoftBank, the biggest exit was orchestrated by Tiger Global, which made a partial exit selling shares worth over $424 Mn in Flipkart to the Japanese conglomerate.

There are various reasons Walmart decided on Flipkart instead of other players in India's sprawling e-commerce space, such as Snapdeal or ShopClues, the primary being its large logistics network and its capability to withstand an onslaught from Amazon. Additionally, Walmart has stated that it intends to sell shares in the company in the form of an IPO in three years. This is a 60% return on the $2.5 billion they invested under a year ago.

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.

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