Walmart To Acquire Majority Stake In Flipkart


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 United States retail giant Walmart, say tax experts.

If the deal with Walmart goes through, it would provide Flipkart with more arsenal to go up against Amazon in the Indian market.

There are reports that Walmart has valued Flipkart at $20 billion.

Sachin and Binny Bansal, both former Amazon employees, founded Flipkart in 2007, and like their USA rival, began by selling books.

According to the filings, the company also bought shares from its present and former employees on December 13, 2017 for USA $100 million that were given as stock options.

US-based fund house Valic, which holds around 4,502 shares in Flipkart, and Vanguard World Fund, which has four lakh shares, have pegged the valuation of the e-commerce company between $15 billion and $19 billion. Last month, Flipkart consolidated all its Bengaluru offices in one large campus. It has 100 million registered users, 100,000 sellers, 21 warehouses, 10 million daily page visits. After Walmart's acquisition comes through, Binny Bansal will stay on as the group CEO and also be given the title of executive chairman.

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Flipkart past year named Kalyan Krishnamurthy, a former executive of investor USA hedge fund Tiger Global Management, as the head of its core business, while Binny Bansal took the broader strategic role of group CEO. But the board members had turned down the proposal. Dropbox Inc's chief technology officer, Aditya Agarwal, joined the board in 2014. This is because Amazon is already the second-largest online retailer in India after Flipkart and is thus a primary competitor. The deal also required SoftBank Group to sell more than 20% of its shares to Walmart.

- Flipkart bought payment startup PhonePe in 2016. "Interestingly, this has led to fresh contention between the retail bigwigs over the Flipkart deal", Zacks Equity Research said in an analysis released yesterday.

Japan's SoftBank team, which possesses roughly a fifth of Flipkart during its eyesight Fund, is predicted to totally depart, Reuters has previously reported. Tiger Global, whose Partner Lee Fixel has been at the forefront of the negotiations, might retain a nominal stake in the company along with Accel Partners, the earliest investor in Flipkart, and other more recent investors like Tencent and eBay.

- Other investors include the founders and Napsers Ltd. The bank had acquired the shares from Flipkart via investment fund. Walmart will pay the bank approximately $20 billion. SoftBank made little profit from their $2.5billion stake investment in the Flipkart.

- Consolidated revenue jumped 29 percent to 198.55 billion in fiscal 2017.