Walmart may come up with IPO for Flipkart in 4 years

Walmart may come up with IPO for Flipkart in 4 years

Walmart may come up with IPO for Flipkart in 4 years

United States 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 U.S. market regulator, the Securities and Exchange Commission.

Even it would appoint or replace Flipkart's chief executive and other key executives of group companies after consulting Bansal and the board. "Retail and e-commerce are cash-hungry businesses and for further growth [and return on investment]., Walmart does need to invest".

Flipkart's minority shareholders after the deal include co-founder Binny Bansal, China's Tencent Holdings, US hedge fund Tiger Global Management and Microsoft Corp.

The deal now awaits clearance from India's anti-trust regulator and is expected to close later this year.

Following the acquisition, the Flipkart board will initially have eight directors with five being appointed by Walmart, two being appointed by certain minority shareholders and one Flipkart founder (Binny Bansal). (WMT.N) said on Saturday in a filing with a US regulator that it may take India's Flipkart public in as early as four years, detailing for the first time a potential listing timeline for Walmart's largest-ever acquisition.

Walmart noted that the board may be increased to nine directors at any time, with the additional director being appointed by Walmart with the majority approval of Flipkart directors and unaffiliated with Walmart.

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The agreement provides for a "contemporaneous" issuance of fresh shares for an aggregate value of $2 billion and the purchase of shares held by a slate of existing shareholders for a value of $14 billion.

Walmart also said no party would be liable to pay a termination fee if a share issuance or purchase agreement with Flipkart were terminated.

On May 9 - the day the mega deal was announced - Walmart had said it supports Flipkart's ambition to transition into a publicly-listed entity in future.

Minority investors holding 60 percent of Flipkart's stocks "acting collectively, may necessitate Flipkart to effect an initial public offering" (IPO) 4 decades after the beginning of their Walmart Flipkart transaction, " the Bentonville, " Arkansas-based retailer said at a May 11 filing with an U.S. Securities and Exchange Commission. The right of first refusal for the minority shareholders will expire if Walmart owns 85 per cent of the outstanding Flipkart shares.

The minority shareholders of Flipkart will be able to exercise a conditional right of veto over "specified decisions relating to Flipkart's business and activities", the filing said but did not spell out the details. For at least two years following closing of the transactions, two of the Walmart-appointed directors won't be affiliated with Walmart.

It said among other transfer restrictions and subject to certain exceptions, transfers of Flipkart shares will be subject to a right of first refusal exercisable by Walmart and other significant minority shareholders, and in certain situations, co-sale rights.

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