Blog Exposure - Walmart Increases Investment in Indian Ecommerce Company Flipkart with Acquisition of Softbank's Stake

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LONDON, UK / ACCESSWIRE / May 25, 2018 / If you want access to our free research report on Walmart Inc. (NYSE: WMT), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=WMT as the Company's latest news hit the wire. On May 23, 2018, Masayoshi Son, the founder of SoftBank Group Corp. (“SoftBank”), declared that Walmart has acquired SoftBank's entire stake in Indian ecommerce Company, Flipkart. However, the exact value of the deal or other details were not disclosed by either party. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Walmart had announced the acquisition of a 77% stake in Flipkart on May 09, 2018, in a deal valued at approximately $16 billion.

Details of SoftBank's Stake in Flipkart

SoftBank had invested in Flipkart through the $93 billion SoftBank Vision Fund. SoftBank had invested approximately $2.5 billion in August 2017 to acquire nearly 20% stake in Flipkart. SoftBank's investment in Flipkart came in after it failed to complete the sale of its portfolio Company, Snapdeal, to Flipkart. It is estimated that the value of SoftBank's stake in Flipkart has gone up to $4 billion.

SoftBank has not given any reason for divesting its stake in Flipkart. This is the first known stake sale and quick exit by SoftBank from its investment via the Vision Fund. Generally, any private equity fund stays invested in a portfolio Company for a minimum of 5 years to 7 years. SoftBank's average investment duration in any portfolio Company is 13.5 years.

Softbank had been delaying the stake sale as it was reviewing the tax issues related to short-term capital gains.

SoftBank's Investment in India

So far, SoftBank has invested more than $6 billion in Indian Companies, including Flipkart; online grocer Grofers; taxi service Ola; budget hotel rooms network OYO; and in the parent Company of mobile-payment firm Paytm. It is speculated that SoftBank could utilize the proceeds from the stake sale in Flipkart to increase its investment in Paytm.

Walmart - Flipkart Deal

Walmart signed an agreement with Flipkart on May 09, 2017, to acquire the 77% stake in the latter. The deal is valued at $16 billion, which includes $2 billion as new equity funding. The balance stake would continue to be held by Flipkart's existing shareholders and investors. Walmart also plans to help Flipkart to transition into a publicly-listed Company and will be a majority-owned subsidiary of Walmart in the future.

The deal is expected to close at the end of FY18, subject to the receipt of regulatory approvals and other closing conditions. Walmart plans to finance the deal using a mix of cash in hand and fresh debt. Walmart will include Flipkart's business as part of its International business segment for financial reporting. Walmart expects the deal to negatively impact its earnings per share (EPS) by $0.25 to $0.30 in FY19, and by $0.60 in FY20.

About Flipkart

Bengaluru, India-based Flipkart was founded in 2007, and is one of India's largest online retail Company. Flipkart's business in India also includes group Companies Flipkart, Myntra, Jabong, and PhonePe. The Company's online platform sells everything from electronics, large appliances, and mobiles, to fashion and apparel. It offers over 80 million products across 80+ categories. Flipkart competes directly with Amazon in the online retail space in India. The Company also has a supply chain arm, eKart, which serves over 800 cities and makes around 500,000 deliveries every day. For the fiscal year ended March 31, 2018, Flipkart recorded a gross merchandise value (GMV) of $7.5 billion and net sales of $4.6 billion.

About Walmart Inc.

Founded in 1945 and based in Bentonville, Arkansas, Walmart is one of the largest retailers in the world. The Company operates over 11,700 retail units under 65 banners in 28 countries and ecommerce websites. It employs approximately 2.3 million associates worldwide, out of which 1.5 million are in the US. The Company's revenues were $500.3 billion for the fiscal year 2018.

About SoftBank Group Corp.

Japan's SoftBank is a corporate group comprising the pure holding Company SoftBank Group Corp. and 761 subsidiaries. Masayoshi Son, Chairman and CEO of SoftBank, announced the SoftBank's Vision Fund in October 2016, which aims to be the largest-ever tech fund and would invest in technologies like Robotics, Artificial Intelligence (AI), and Internet of Things (IoT). Investors in SoftBank's Vision Fund include the government of Saudi Arabia, Apple, Foxconn Technology Group, Qualcomm Inc., and Sharp Corp. The Vision Fund has raised over $93 billion in capital till date.

Stock Performance Snapshot

May 24, 2018 - At Thursday's closing bell, Walmart's stock marginally fell 0.19%, ending the trading session at $82.85.

Volume traded for the day: 8.57 million shares.

Stock performance in the past twelve-month period - up 6.01%

After yesterday's close, Walmart's market cap was at $247.10 billion.

Price to Earnings (P/E) ratio was at 28.33.

The stock has a dividend yield of 2.51%.

The stock is part of the Services sector, categorized under the Discount, Variety Stores industry. This sector was up 0.2% at the end of the session.

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