Flipkart buys back $350 mn worth shares

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Reuters reported in February here that it was in talks to purchase a stake of over 40 percent in Flipkart, which is backed by the likes of SoftBank Group, Tiger Global, eBay, Accel Partners, Naspers, Tencent Holdings and Microsoft Corp.

A FactodDaily report on Thursday stated that the deal will be a cash-and-stock buyout for around $14.6 billion.

This could likely be the secondary valuation at which Walmart will invest in Flipkart.

The move is said to be in line with Flipkart's efforts to ease of the acquisition deal with Walmart.

"The buyback will enable the e-commerce giant to bargain for a favourable deal with the US-based retail behemoth Walmart, which is eyeing a majority or controlling equity stake in it to foray into the multi-billion dollar Indian retail space", a market analyst told IANS.

Amazon has offered a US$2 billion breakup fee as part of its bid, the report said.

In December a year ago, Flipkart Ltd, the Singaporebased parent entity of the Indian e-commerce giant, had bought back shares worth close to $800 million from investors including Tiger Global, Accel Partners, and DST Global. Walmart may end up spending anywhere between $8 billion and $12 billion to buy a majority stake in Flipkart, and is expected to increase its shareholding in the online retailer in a phased manner.

As it is, right ahead of the blockbuster deal, Flipkart has bought back over 1.8 million shares worth more than $350 million from minority investors valuing the company at $17.69 billion as per information filed by Flipkart with Singapore's Accounting and Corporate Regulatory Authority. India-based website BGR.in reported cofounder Binny Bansal might remain in some capacity as Walmart wants to retain only one of the founders. "It is important for food safety", the source said.

"Walmart may look at bringing in its own private labels via Flipkart to the Indian consumers".

"The stakes are really high for Walmart", said Brian Yarbrough, senior research analyst with Edward Jones.

If the deal with Walmart goes through, it would provide Flipkart with more arsenal to go up against Amazon in the Indian market.

Amazon's offer could kickstart a new battle between it and Walmart, already fierce retail rivals in the United States.