How Walmart plans to fund the deal

This photo taken on May 8, 2018 shows the logo of ecommerce company Flipkart at its headquarters in Bengaluru. AFP

Walmart, which announced $16 billion acquisition of ecommerce major Flipkart, will use a  combination of financial instruments to fund the deal.

It will include newly issued debt and cash on hand. Walmart’s $16 billion investment includes $2 billion of new equity funding, which will help Flipkart achieve its growth potential. Walmart will own 77% stake in Flipkart, and remainder of ownership will be held by Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings Limited, Tiger Global Management LLC, and Microsoft Corp.

The deal is expected to be closed later in FY19. While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future, Walmart said in a presentation to investors.

In FY20, Walmart anticipates an EPS headwind in total of around $0.60 per share, comprised of Operating losses of approximately $0.40 to $0.45 per share, assuming minimal tax benefit for the losses in the near to mid term. 

J P Morgan Securities LLC is acting as the lead financial advisor for Walmart, along with Barclays, with Hogan Lovells, Shardul Amarchand Mangaldas & Co. and Gibson, Dunn & Crutcher LLP as outside counsel to Walmart. Goldman Sachs & Co. LLC acted as exclusive financial advisor to Flipkart. Gunderson Dettmer LLP, Khaitan & Co., Allen & Gledhill LLP and Dentons Rodyk & Davidson LLP provided legal counsel to Flipkart.

Walmart, which has more than 11,700 stores under 65 banners in 28 countries and ecommerce websites, is planning to continue its partnership to create sustained economic growth across agriculture, food and retail.

Among other initiatives, Walmart will partner with kirana owners and members to help modernise their retail practices and adopt digital payment technologies.

With fiscal year 2018 revenue of $500.3 billion, Walmart employs approximately 2.3 million associates worldwide.

Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment centre in 19 cities across nine states in India, with more than 95% of sourcing coming from India, aiding suppliers, creating skilled jobs and contributing to local economies across the country. Krish Iyer, president and chief executive officer of Walmart India, will continue to lead that part of the business.

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How Walmart plans to fund the deal

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