One source said Flipkart was valued at $20 billion, while two others said Walmart, the world’s largest retailer, had put the target company’s value at as much as $22 billion, a price at which it will spend more than $16 billion.
Alphabet Inc., the parent company of search giant Google, is said to be participating in the deal with a $3 billion investment.
Kalyan Krishnamurthy will stay on as chief executive of Flipkart.
Both the companies signed tentative agreements after meetings, which went on for most of Thursday. “Everything has been finalised… The papers have been signed by both the parties,” said one of the sources, adding this was the biggest acquisition deal by Walmart.
The sources also confirmed that the deal will be a mix of cash and stock. “Cash component will be close to 55%, which will mark the exit of some of the largest investors in Flipkart,” a second source said. All three sources asked to stay anonymous in this story because of the acquisition has not been officially announced.
“Some of the friendly investors like Tencent, Microsoft and Tiger Global will not cash out completely,” said the first source. Softbank, which holds a little over 20% stake in Flipkart will exit the company fully and is expected to make $4 billion – a 60% return on its investment of $2.5 billion merely eight months ago.
Involved in the deal were JP Morgan Chase as Walmart’s banker (Flipkart has a firm representing them from Singapore), Amarchand Mangaldas as legal advisors, and Bain & Co. as management consultants.
Flipkart, Walmart, and Google had not responded to requests for comment at the time of publishing this story.