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Walmart May Launch Flipkart IPO In As Early As 4 years

Walmart May Launch Flipkart IPO In As Early As 4 years

Else, it could opt to walk out of the agreement without inviting any penalties.

USA retail giant 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, according to the company's regulatory filings with the United States market regulator, the Securities and Exchange Commission.

The agreement was signed by Walmart and its wholly-owned subsidiary Wal-Mart International Holdings Inc, a DE corporation, with Singapore-based Flipkart Private Ltd, which means that it will be an offshore transaction. Walmart said in the filing.

Walmart notes that it may request Flipkart to issue additional shares with an aggregate purchase price of up to $3 billion, anytime in one year after the transaction close.

Walmart also mentioned no celebration would be responsible to pay a termination fee if a share issuance or invest in arrangement with Flipkart were also terminated. The deal now awaits clearance from India's anti-trust regulator and is expected to close later this year.

India's largest e-commerce company Flipkart's recent fundraise of $1.

"These additional ordinary shares will be issued at the same price per share as the ordinary shares issued in the share issuance, subject to adjustment for any stock splits, stock dividends or similar transactions", the filing said.

Walmart also provided some clarity on its plans to come out with an initial public offering (IPO) for Flipkart.

Walmart, in a US Securities and Exchange Commission (SEC) filing, gave details of its agreement to take about 77 per cent stake in Flipkart through infusing Dollars 2 billion cash in the company and buying some of Flipkart investors? stake for USD 14 billion.

Walmart said it can, in future, reconstruct a board member together with the approval of the majority of those Flipkart supervisors. Binny Bansal, co-founder and group CEO, continues in his role while Sachin Bansal, co-founder and executive chairman made a decision to quit the company.

The remaining positions will be taken up by Flipkart founder Binny Bansal and two remaining directors to be appointed by certain minority shareholders. According to the filing, the Flipkart board will initially have eight directors, five of which would be appointed by Walmart. A majority of Flipkart's minority shareholders also have a right to take the company public four years after the deal is completed, at a valuation higher than what Walmart has paid in this transaction. SoftBank holds approximately 22% in Flipkart.

Moreover, holders of 40 per cent of Flipkart shares held by the minority shareholders - or a combine holding of 9.2 per cent of the total equity - will be able to veto "certain material, non-arms' length transactions between Flipkart and Walmart".

Reuters formerly noted that Google-parent Alphabet was in talks to spend £ 3 billion to get a roughly 15% stake in Flipkart.

Last week, all significant shareholders in Flipkart like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their shares to Walmart.

"Shareholders agreement would expire upon the consummation of the IPO, whether initiated by the board or the minority stockholders", it added.

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