Flipkart, Walmart all set for world’s biggest e-commerce deal today

Bengaluru/New Delhi: Walmart Inc. is set to announce the purchase of a majority stake in Flipkart in a deal that will value India’s largest online retailer at more than $21 billion, making it the world’s biggest ever e-commerce acquisition.

The deal is expected to be made public on Wednesday with Walmart chief executive Doug McMillon in India for the announcement, three people aware of the latest discussions said, requesting anonymity.

Walmart will buy roughly 70% of Flipkart, the people said. The world’s largest retailer will invest $2 billion in fresh capital into the online retailer at a valuation of $21 billion and buy the rest of the stake from existing Flipkart investors at a valuation of $17-18 billion, they said.

It is likely to bring along Alphabet, the parent company of search giant Google, as a strategic partner and investor into Flipkart. Google is expected to purchase up to 5% in Flipkart.

The deal will also mark the end of an era with the impending exit of executive chairman Sachin Bansal, who founded Flipkart in a two-bedroom apartment in Bengaluru’s upscale Koramangala neighbourhood in 2007 with Binny Bansal (not related). Sachin Bansal is expected to sell his entire 5.5% stake in Flipkart, which started off as an online bookseller, for around $1 billion.

Most of Flipkart’s biggest investors are expected to sell their entire stakes in the e-commerce giant, although a few, including Tiger Global Management and Tencent Holdings, are expected to retain a small part of their stake in the company.

SoftBank Group is selling its 20%-plus holding, though it is still evaluating ways in which it can avoid paying a hefty tax on its investment.

Flipkart’s group CEO Binny Bansal, who will also take on the role of chairman after Sachin Bansal’s exit, and CEO Kalyan Krishnamurthy are expected to remain at Flipkart after the deal goes through, the people cited above said.

Earlier, SoftBank, which became the largest shareholder in Flipkart when it agreed to invest over $2.5 billion last August, had been pushing other Flipkart investors to wait for a rival offer from Amazon. But last week, the Japanese firm agreed to go along with other key shareholders, including Tiger Global Management, Naspers and Accel Partners, who were firm in their preference for Walmart as a buyer.