The investment implies a valuation of almost $21 billion for Bengaluru-headquartered Flipkart.
At USD 20.7 billion valuation, the USD 3 billion investment can get less than 15 per cent stake.
"Immediately after the closing of the transactions, all Flipkart preference shares will convert into ordinary shares", Walmart said. It will also constitute an eight-member board, of which five will be appointed by Walmart. Flipkart may opt for an initial public offering after four years of closing the Walmart deal at a valuation no less than what was paid by Walmart.
The remaining 23% stake in Flipkart will be held by minority shareholders including co-founder and group chief executive officer Binny Bansal, Chinese Internet conglomerate Tencent, investment firm Tiger Global and software firm Microsoft Corp.
As a portion of the bargain, wal mart will initially appoint five supervisors to Flipkart's plank, two supervisors will probably be appointed by minority investors whilst Bansal will take a single plank seat, as stated by the filing. And in the latest SEC filing, it has, for the very first time, talked about the potential listing timelines.
There are several situations under which the agreement can be terminated: the failure to win regulatory approval from the Competition Commission of India; material adverse change in Flipkart's business; inaccuracy of representations and warranties, and performance of covenants; and governmental or shareholder litigation challenging either of the share issuance or secondary share purchase transactions. No termination fee would be payable by any party if the Share Issuance Agreement or the Share Purchase Agreement were terminated, ? it said.
But Japans SoftBank has not yet made a decision to sell its 20-22 per cent stake in Flipkart to Walmart, sources with direct knowledge of the development said.
Also, while Walmart stresses on no termination fee, Flipkart's biggest competitor, Seattle-based Amazon, had offered a break-up fee of $2 billion to the Indian e-commerce giant if the deal fell through.
Last week, all significant shareholders in Flipkart like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their shares to Walmart. This is the first sale after the acquisition of Flipkart by Walmart. This gains significance because Japan's SoftBank Group, which owns a roughly 20% stake in Flipkart, was rethinking its exit due to tax liabilities and because it saw further value in Flipkart.
This is unedited, unformatted feed from the Press Trust of India wire.