Flipkart IPO Could Be in Four Years, Walmart Says in Regulatory Filing

Posted May 13, 2018

The filing also says that there are no termination fees linked to the deal. No termination fee would be payable by any party if the Share Issuance Agreement or the Share Purchase Agreement were terminated, ? it said.

This would be done at a valuation no less than that paid by Walmart under the share issuance agreement. The Flipkart share purchase deal is expected to close by 9 March, 2019. Walmart had reported an EPS of $3.28 in Fiscal 2018.

Walmart or its components could question Flipkart to issue new common shares of up to 3 billion until the closing of their "transactions and before or on the very first anniversary of their final", it also said. Walmart's additional share purchase, if made, will be at the same price at which it made the initial investment, the filing said.

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

Similarly, minority investors holding 60% of Flipkart shares and acting together will have veto rights to prevent significant transactions involving Flipkart while investors holding 40% shares will have veto rights to prevent certain transactions between Flipkart and Walmart.

The filing also said the IPO would be done at no less a valuation than the deal price for the e-commerce firm.

Flipkart's board will be initially comprised of eight directors including five Walmart-appointed directors of which two directors must be unaffiliated with Walmart for at least two years after transaction close. Flipkart's other co-founder Sachin Bansal had exited the company earlier this week, by selling his 5.5% stake for about $1 billion.

Moreover, Bentonville, Arkansas-based USA retailer said in the filing that it has the right to appoint or change chief executive or other principal executives of the country's largest e-commerce company.

The Bentonville, Arkansas-based retailer and its appointed directors will have veto rights over specific decisions related to Flipkart's business and activities. This is the first sale after the acquisition of Flipkart by Walmart.

"Shareholders agreement would expire upon the consummation of the IPO, whether initiated by the board or the minority stockholders", it added. "If the drag along right is exercised, each minority shareholder must be entitled to sell all of its shares in the proposed transaction", the filing added.

After the deal is made, the minority shareholders in it are Flipkart's co-founder Binny Bansal, China's Tencent Holdings (0700.HK), U.S. hedge fund Tiger Global Management and Microsoft Corp (MSFT.O).

SoftBank Chief Executive Masayoshi Son said that their investment from Flipkart had grown to nearly $4 billion.