With this, Walmart now owns 77% stake in Flipkart, marking one of the largest exits in India’s internet ecosystem. The remaining 23% stake will be held by Flipkart co-founder Binny Bansal, Tencent, Tiger Global and Microsoft. Flipkart’s financials will also be reported as part of Walmart’s International business segment, the company said in a statement.
Walmart had first announced its intent to acquire Flipkart in May 9. The Bentonville-based company’s $16 billion investment includes a $2 billion of new equity funding to help accelerate the growth of the Flipkart business.
Walmart has an option to invest an additional $3 billion in India’s largest online retailer Flipkart at the same valuation within a year of completing the acquisition of 77% stake in the company, the company had disclosed in earlier regulatory filings.
“Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart,” said Judith McKenna, president and CEO of Walmart International.
“Our investment will benefit India by providing quality, affordable goods for customers, while creating new skilled jobs and opportunities for suppliers. As a company, we are transforming globally to make life even easier for customers, and we are delighted to learn from, contribute to and work with Flipkart to grow in India, one of the fastest-growing and most attractive retail markets in world.” McKenna said.
As reported earlier, Flipkart’s existing management team, including CEO Kalyan Krishnamurthy will continue to lead the business. Both Walmart and Flipkart will also retain their unique brands and operating structures in India.
Investors Tencent and Tiger Global will remain on Flipkart board along with co-founder Binny Bansal and independent board members, and will be joined by new members from Walmart. Flipkart co-founder Sachin Bansal had quit the company in May, selling his 5.5% stake for about $1 billion.
Walmart had earlier said that Flipkart’s board will be initially comprised of eight directors including five Walmart-appointed directors of which two directors must be unaffiliated with Walmart for at least two years after transaction close.
ET had reported at the time that Steuart Walton, grandson of Walmart founder Sam Walton, Judith McKenna and Dirk Van den Berghe, regional CEO of Walmart Canada and Asia, will join the Flipkart board.
“We are poised and ready to deliver the full value of this partnership for India,” said Flipkart’s co-founder and group chief executive officer Binny Bansal “By combining Walmart’s omni-channel retail expertise, supply-chain knowledge and financial strength with Flipkart’s talent, technology and local insights, we are confident that together we can drive the next wave of retail in India.”
This acquisition has provided an exit to early investors including Accel Partners and Naspers as well as Japanese Internet conglomerate SoftBank. Earlier this month, SoftBank said it had realised a 60% return on its $2.5 billion investment last August. In May, Naspers had sold its 11.8% stake in Flipkart to Walmart for $2.2 billion, representing an IRR of 32%.